By Ruth Eshio
Central Bank of Nigeria Monetary policy committee has held its benchmark interest rate at 13.5 per cent, its governor Godwin Emefiele said on Friday. However, the bank raised the cash reserve ratio for lenders, at its first interest rate meeting for the year. TheMonetary Policy Committee of the Bank raised the Cash Reserves Ratio from 22.5 per cent to 27.5 per cent. The Cash Reserve Ratio is the share of a bank’s total deposit that is mandated by the CBN to be maintained with the latter in the form of liquid cash. The CRR is used by the CBN to ensure that a part of Deposit Money Bank’s cash is with the Central Bank and is hence, secure. The move according to the CBN is part of measures aimed at driving down inflation which had in the last four months remain high.
Figures from NBS showed that inflation rate had risen to about 11.98 per cent in December which is the highest in recent times The Governor of the CBN, Mr Godwin Emefiele, while addressing journalists shortly after the committee’s meeting said the move was aimed at mopping up excess liquidity from the banking system which has become a threat to inflation. He said nine members of the committee voted to alter the CRR from 22.5 per cent to 27.5 per cent. The governor said apart from the CRR that was increased, the committee decided to retain the Monetary Policy Rate at 13.5 per cent. Also retained are the Liquidity Ratio which was left at 30 per cent; and the Asymmetric Window which was left at +200 and -500 basis points around the MPR.