BREAKING: CBN Retains Benchmark Interest Rate at 12.5%

By Dipo Olowookere

The benchmark interest rate in the country has been retained at its previous level by the Central Bank of Nigeria (CBN).

The Governor of the CBN, Mr Godwin Emefiele, at a briefing with newsmen in Abuja on Monday, said the decision to hold the Monetary Policy Rate (MPR) at 12.50 per cent was reached at the Monetary Policy Committee (MPC) meeting today.

According to him, there was no reason to tamper with the interest rate at this moment because the various interventions of the bank to sustain the economy were yielding positive results.

“Loosening monetary policy stance would provide the succour for stimulating output growth and rapid recovery but with implications for domestic private investment and capital mobilisation to support the huge domestic financing gap,” he said while reading the communiqué at the end of the meeting.

He said apart from the MPR, which was retained, members of the committee also agreed to leave the Cash Reserve Ratio (CRR) at 27.5 per cent, while the liquidity ratio was also kept intact at 30 per cent, with the asymmetric corridor around the MPR at +200/-500 basis points.

“Committee noted at this meeting that the economic fundamentals have marginally improved by the end of June 2020 following the gradual pickup of economic activities as the positive impacts of the various interventions permeate within the economy.

“The earlier downward adjustment of the MPR by 100 basis points to 12.5 per cent to signal a loosening policy stance is yielding positive impacts as credit growth increased significantly in the economy,” he declared at the briefing.

He said there was a need to allow time for the “transmission effect to permeate the economy,” noting that it was a “relatively cautious option” to hold rates in order to evaluate the effectiveness of policy actions already taken to counter the effects of the COVID-19 pandemic.