Economic Situation To Determine Interest Rates- CBN

By Ikenga Chronicles July 26, 2017

Economic Situation To Determine Interest Rates- CBN

The Central Bank of Nigeria(CBN) has hinted that the interest rates across board would be determined by the state of the domestic economy.
CBN Governor, Godwin Emefiele, while presenting the communiqué of the Monetary Policy Committee (MPC), stated that there was “a vote of six to two to retain the Monetary Policy Rate (MPR) at 14 per cent” after issues of domestic activities and the uncertainties surrounding the global environment were considered.
In addition, Cash Reserve Ratio(CRR) was retained at 22.5 per cent; Liquidity Ratio at 30.00 per cent; as well as the asymmetric corridor (CBN borrowing and lending with banks) at +200 and -500 basis points around the MPR.
The CBN boss stated that the committee arrived at these conclusions so that it  would signal sensitivity to growth and employment concerns and encourage the flow of credit to the real economy, as well as promote policy consistency and credibility.
In his reaction, Chief Executive Officer of Cowry Asset Management Limited, Johnson Chukwu, said the decision was expected, as otherwise it would have failed‎.
“The real sector fund challenge (high interest rate) will stay. Foreign exchange will be steady as there would be no much fund to pursue the dollar.
“Interbank lending would also remain high as the apex bank continues liquidity mop up, unless the promised payment of contractors, which is largely doubtful, is quickly realised,” he said.
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