- CBN Lowers Interest Rate to 12.5% to Stimulate Economy
The Central Bank of Nigeria (CBN) led Monetary Policy Committee (MPC) has lowered policy rate by 100 basis points from 13.5 percent to 12.5 percent on Thursday.
In a series of tweets put out by the apex bank, Godwin Emefiele, the Governor, CBN, stated that this is the right time to diversify the economy through efficient monetary and fiscal policies.
The governor “insists there is no better time than now for Nigeria to follow through with monetary and fiscal policies aimed at diversification.”
The central bank has continued to adjust both fiscal and monetary policies in an effort to mitigate the negative impacts of COVID-19 on Africa’s largest economy and speed up the recovery process.
On Wednesday, the apex bank reduced interest rate on facilities offered through OFIs from 9 percent to 5 percent to further ease the effect of COVID-19 on businesses and households.
Emefiele said the nation may not slide into an economic recession if growth remains positive through an aggressive reopening of businesses.
Monetary Policy Committee left Cash Reserve Ratio unchanged at 27.5 percent. While the Liquidity Ratio was also left at 30 percent.
Since Nigeria recorded her first index case on February 27, the economy has struggled to generate revenue and sustain business activities, forcing the central bank to put together about N3.5 trillion stimulus package to support businesses and cushion the economy.
Nigeria’s economy grew at 1.87 percent in the first quarter despite numerous headwinds caused by COVID-19 pandemic and the plunge in global oil prices.