Babajide Okeowo
After the meeting of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), the committee has held the Monetary Policy Rate (MPR) constant at 13.5%. This was disclosed by Governor, CBN, Godwin Emefiele, while reading the communique at the end of the MPC meeting.
Other parameters such as Cash Reserve Ratio (CRR), Liquidity ratio, and asymmetric corridor remain unchanged at 27.5%, 30.00% and 200bps and -500bps respectively around the MPR.
According to the MPC, the decision to hold all rates constant was largely driven by the outbreak of COVID-19 that has largely disrupted the global economy, as Nigeria faces a crunch test following crash in oil price.
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Emefiele further noted that the current pandemic may lead Nigeria into another round of recession.
A finance and economic expert had urged the Central Bank of Nigeria to compel the Deposit Money Banks to reduce the high interest rate currently being charged by banks on lending.
He opined that with the current economic challenges facing the country as a result of the outbreak of the coronavirus, time had come for banks to reduce their lending rates in order to support the growth of key sectors of the economy.
According to Obadiah Malaifa, a former Deputy Governor at the CBN, a reduction in interest rate would boost confidence in the economy.
“The CBN should loosen up a bit. They should loosen the monetary parameters a little bit so that it can boost confidence and lift up borrowing in the economy. It will help to boost some level of confidence in the economy. The CBN should also step up the implementation of some of the initiatives that they have already announced” he said.
