CBN crashes interest rate to 13.5%

…First time in two years

As against the prediction of most analysts, the Central Bank of Nigeria (CBN) has reduced the Monetary Policy Rate (MPR) from 14 per cent to 13.5 per cent, the first reduction since 2016.

Announcing the slight drop in interest rate at a media briefing after the apex bank’s Monetary Policy Committee (MPC) in Abuja on Tuesday, the CBN Governor, Mr Godwin Emefiele said the reduction would also manage investor sentiments in terms of capital inflows.

The committee, which holds a meeting once in three months, first set the benchmark interest rate at 14 per cent in July 2016 to combat inflation and improve investor attitudes towards bringing in new capital. The country was in a recession at that time.

The Monetary Policy Rate (MPR) is the baseline interest rate in an economy. Other interest rate used in an economy is built on the MPR.

At its January meeting, the committee had said that the chances of loosening were remote although it said tightening would “result in the loss of the gains so far achieved.”