In a surprise move on Tuesday, the Central Bank of Nigeria (CBN) slashed its monetary policy rate to 13.5 percent from 14 percent as part of measures to stimulate the economy and boost production.
The move is the first rate cut since November 2015. The CBN has consistently retained its MPR at 14 percent since July 2016 to support the naira and curb inflation.
Announcing the rate cut in Abuja after a 2-day Monetary Policy Committee (MPC) meeting, Godwin Emefiele, CBN governor said six of the 11 members of the committee voted for 50 basis points cut in the rate.
“This rate cut is meant to signal that there is a need for us to move course a little further. To do so we need to begin to look at money supply, liquidity to push growth,” said Emefiele
Nigeria, which has Africa’s biggest economy, emerged from its first recession in 25 years in 2017. Since then higher oil prices have helped the country to halt the contraction and stimulate growth.
The CBN governor said Nigeria should be able to push growth to between 2.7 and 3 percent this year, up from 1.9 percent last year.
Many analysts have projected that the CBN will sustain its tight monetary stance even at this month's meeting and through to the middle of the year at least.
Many analysts have projected that the CBN will sustain its tight monetary stance even at this month's meeting and through to the middle of the year at least.
Emefiele is expected to step down from the CBN by June when his five-year tenure is expected to expire.
From the look of things, it was certain that President Mohammadu Buhari may not extend his tenure as many hawks in the government are rooting for a more dynamic change in the regulatory bank.
Nigeria inflation rate fell to 11.31 percent in February from 11.37 percent in January also against the projections by analysts that inflation will rise due to election spending.
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