Rising from its two-day Monetary Policy Committee (MPC) meeting today (Tuesday), the CBN declared the retention of the subsisting Monetary Policy Rate (MPR) at 13.5% in light of the prevailing economic conditions in Nigeria and the rest of the world, notably the twin impact of global oil glut and the COVID-19 epidemic.
In the same vein, it retained the asymmetric corridor at +200 and -500 basis points around the MPR, the Cash Reserve Requirement (CRR) at 27.5% and liquidity ratio at 30% as they were before.
The MPR measures the benchmark lending rate while the CRR is a metric for deciding the minimum portion of the total deposits of customers, held by commercial banks as reserves (cash or deposits) with the Central Bank.
The liquidity ratio is a financial standard for gauging a bank’s ability to pay off its short term debt obligations.
The asymmetric corridor aims at increasing the flexibility of monetary policy, by providing the ability to make timely reactions to external finance or risk sentiment shocks by means of effective management of daily open market operations.