Wednesday, 27 January 2016

CBN retains lending rate at 20%

The Monetary Policy Committee of the Central Bank of Nigeria on Tuesday resolved to leave the Monetary Policy Rate, MPR, and liquidity ratio unchanged at 11 per cent and 30 per cent respectively.

During its last meeting in November 2015, the committee had decided to cut MPR from 13 per cent to 11 per cent, the first time in six years, while Cash Reserve Requirement, CRR, was reduced from 25 per cent to 20 per cent.

MPR is the rate at which the CBN lends to commercial banks, while CRR is a monetary tool used to either call up excess liquidity in the system, or release funds needed to stimulate the growth of the economy as situation demands.

On the unstable interest rates by commercial banks, Mr. Emefiele said CBN could not intervene and regulate their rates, as this would be beyond its regulatory mandate.

“Banks are in business to make money. We cannot force them to fix interest rate at a particular level. What we can do is to continue to put in place policies that would encourage them to introduce projects that would target the lending to the real sector and the small and medium enterprises, SMEs,” he explained.

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