Economy & Finance

Monetary Policy Rate Rises To 12% – CBN

CBN-MPC

Following the concern of the Monetary Policy Committee (MPC) of the , that the excess liquidity in the banking system was contributing to the current pressure in the market, the committee on Tuesday, announced a tightening of monetary policy stance by increasing the monetary policy rate by 100 bases point from 11 per cent to 12 per cent.

“The Committee, in its assessment of relevant internal and external indices, came to the conclusion that the balance of risks is tilted against price stability.

“The MPC therefore, voted to tighten the stance of monetary policy. One member voted to retain the CRR at 20 per cent while another member voted to retain the current width of the asymmetric corridor.

“The MPC voted to raise MPR by 100 basis points from 11.00 per cent to 12.00 per cent; raise CRR by 250 basis points from 20 to 22.50 per cent.

“The Liquidity Ratio was retained at 30 per cent; and the asymmetric corridor was narrowed from +200 and -700 basis points to +200 and -500 basis points.”

The Governor, (CBN), Mr Godwin Emefiele said MPR was the anchor rate at which the CBN, in performing its role as lender of last resort, lends to Deposit Money Banks to boost liquidity in the banking system.

He said by this increase the cost of funds to the banking system from the apex bank would now increase thus leading to an increase in lending rate from commercial banks to businesses.

Emefiele said the increase was necessary because of the negative impact on consumer prices with rate rising to its highest level in three years at 11.38 per cent.

He said at 11.38 per cent rate of , this had breached the CBN’s policy reference band of six per cent to nine per cent.

He lamented that previous efforts to reflate the economy in order to spur growth had not elicited the required response from Deposit Money Bank as there had been resurgence in liquidity in the .

 

 

 

 

 

Source: Vanguardngr

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