The Central Bank of Nigeria Monetary Policy on Tuesday cut interest rates by 50 basis points to 27 per cent.
The move brings excitement to businesses as Nigerians push for a reduction in the cost of living.
Interestingly, the latest Monetary Policy Rate cut is the first since 2020, the Covid-19 period.
Announcing the interest rate reduction, Olayemi Cardoso said the Monetary Policy Committee based its decision on the improved prevailing macroeconomic reality in Nigeria.
Like MPR, MPC also adjusted the Cash Reserve Ratio, CRR, to 45 per cent for Deposit Money Banks and 16 per cent for Merchant Banks, and introduced a 75 per cent CRR on Non-TSA deposits.
It also adjusted the asymmetric corridor at +250/-250 basis points around the MPR.
The committee retained the Liquidity Ratio, LR, at 30 per cent.
Cardoso cited indicators including the fifth consecutive disinflation of the country’s headline inflation (21.12 per cent in August), a stable exchange rate (N1,487.37 per dollar on Tuesday at the official market) and robust external reserves, which stood at $42.13 billion in September 2022.
“These include the sustained disinflation, improved output growth, stable exchange rate, and robust external reserves,” Cardoso stated on Tuesday in a briefing after its 302nd MPC meeting in Abuja.
The decision immediately triggered the Naira’s appreciation at the money market, but the Nigerian Exchange Market closed bearish, with investors losing N322 billion on Tuesday.
MPR cut supports growth, investment – CPPE
Reacting, the Centre for the Promotion of Private Enterprise, in a statement by its Chief Executive Officer, Muda Yusuf, said the easing of monetary measures is a significant policy shift towards supporting growth and investment in the Nigerian economy.
“This marks a significant policy shift toward , following an extended period of aggressive monetary tightening to rein in inflation.”
Nigerians want a cut in the cost of living – NECA
The Nigeria Employers’ Consultative Association (NECA), while commending CBN for the long-awaited interest rate cut, noted that the country’s economic stability touted by Cardoso will only have meaning when Nigerians experience relief through lower food prices and living costs.
The Director-General of NECA, Mr. Adewale-Smatt Oyerinde, disclosed this in a statement on Tuesday.
“Macroeconomic stability will only have meaning when Nigerians experience tangible relief through lower food and living costs.
“This is the message Nigerians need to hear for relief from the cost-of-living crisis, and it is also what international investors are waiting for, credible, sustained reforms that create an enabling environment for inclusive growth,” he said.
