CBN Cuts MPR To 12.5%, Upbeat Nigeria Will Head Off Recession

The Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC), Thursday caught market analysts off guard as it resolved to reduce the Monetary Policy Rate (MPR), otherwise known as interest rate by 100 basis points, from 13.5 per cent to 12.5 per cent. It also expressed its confidence that given the measures being put in place by both the monetary and fiscal authorities, the country would head off the recession that had been predicted by multiple institutions. The committee, however, left other monetary instruments unchanged, including the cash reserves ratio and liquidity ratio at 22.7 per cent and 30 per cent respectively. 

The reduction in interest rate came despite mounting inflationary pressure. The last time MPC adjusted MPR was in March 2019, when the rate was reduced from 14 per cent to 13.5 per cent. 

Speaking at the end of the meeting in Abuja, CBN Governor, Mr. Godwin Emefiele, who read the committee’s communiqué, expressed confidence that Nigeria may escape a recession if concerted efforts are sustained to stimulate output. Emefiele said the apex bank had so far disbursed a total of N107.45 billion out of the N100 billion health sector intervention fund, the N1 trillion for the agricultural and manufacturing sectors as well as the N50 billion for households and SMEs