CBN’s MPC retains benchmark rate at 13.5%, raises CRR

The Central Bank of Nigeria (CBN) this afternoon, in the wake of its Monetary Policy Committee (MPC) meeting, retained the Monetary Policy Rate (MPR) at 13.5%.

Briefing the public on the outcome of the committee meeting, Godwin Emefiele, the apex bank’s chief, said it was retained alongside the liquidity ratio (at 30%) and the asymmetric corridor (at +200 and -500 basis points).

However, he said the committee by the decision of nine members voted to up the Cash Reserve Requirement (CRR) by 5% from 22.5% to 27.5%.

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The MPR measures the benchmark lending rate while the CRR is a metric for deciding the minimum portion of the total deposits of customers, held by commercial banks as reserves (cash or deposits) with the Central Bank.

The liquidity ratio is a financial standard for gauging a bank’s ability to pay off its short term debt obligations.

The asymmetric corridor aims at increasing the flexibility of monetary policy, by providing the ability to make timely reactions to external finance or risk sentiment shocks by means of effective management of daily open market operations.

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