The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), on Tuesday ended its 266th and second meeting of this year with a vote to cut the benchmark Monetary Policy Rate (MPR) by 50 basis points to 13.5%.
The cut which was the first time in the 41 months since November 2015, is also contrary to reports quoting Godwin Emefiele, the CBN Governor and chairman of the MPC as hinting the rate could be retained for the umpteenth time.
Members of the MPC voted to also keep the “Asymmetric corridor around the MPR at +200/-500bps; Cash Reserves Ratio (CRR) at 22.5%; and Liquidity Ratio (LR) at 30.0%.”
The decision to cut rate, the committee members noted, followed the sustained drop in headline inflation rate, which at the end of February dropped to 11.3% year-on-year; besides the elevated crude oil prices and stable production. There were also factors such as stability in foreign exchange, amid strong external reserves, and the sustained GDP growth.
Also, the committee expressed satisfaction with the inflationary downtrend, it emphasized that growth remain largely fragile, hence, the need to support ailing growth picture.