Nigeria's Central Bank reduces benchmark lending rate to 11.5%

 

Godwin Emefiele

The Central Bank of Nigeria on Tuesday reduced the Monetary Policy Rate from 12.5 per cent to 11.5 per cent after the two-day Monetary Policy Committee Meeting in Abuja.

The committee also voted to retain the Cash Reserve Ratio and Liquidity Ratio at 27.5 per cent and 30 per cent respectively.

The Central Bank Governor, Godwin Emefiele, disclosed this while presenting the communiqué after the meeting.

The Central Bank of Nigeria (CBN) is the Central bank and apex monetary authority of Nigeria established by the CBN Act of 1958 and commenced operations on July 1, 1959. The CBN Act was amended in 1991, 1993, 1997, 1998, 1999 and 2007.

The major regulatory objectives of the bank as stated in the CBN Act are to: maintain the external reserves of the country, promote monetary stability and a sound financial environment, and to act as a banker of last resort and financial adviser to the federal government. 

 The central bank's role as lender of last resort and adviser to the federal government has sometimes pushed it into murky regulatory waters. 

 After the end of imperial rule the desire of the government to become pro-active in the development of the economy became visible especially after the end of the Nigerian civil war, the bank followed the government's desire and took a determined effort to supplement any short falls in credit allocations to the real sector. 

 The bank soon became involved in lending directly to consumers, contravening its original intention to work through commercial banks in activities involving consumer lending. However, the policy was an offspring of the indigenisation policy at the time. 

 Nevertheless, the government through the central bank has been actively involved in building the nation's money and equity centers, forming securities regulatory board and introducing treasury instruments into the capital market.