The governor of Nigeria’s central bank on Tuesday announced the reduction of the Monetary Policy Rate (MPR) from 12.5 percent to 11.5 percent.
The decision to reduce the MPR was made to sustain economic recovery efforts and to arrest rising inflation, said central bank governor Godwin Emefiele while presenting the communique of the 275th Monetary Policy Committee meeting in Abuja, the nation’s capital.
This would be the second time the committee would be reducing the benchmark interest rate this year.
An August report by Nigeria’s National Bureau of Statistics shows the country’s Gross Domestic Product contracted by 6.1 percent in the second quarter of 2020. Emefiele projected there would be growth in the fourth quarter of 2020 or the first quarter of 2021.
The apex bank governor said the committee also retained the cash reserve ratio at 27.5 percent.
Emefiele called on commercial banks to respond to the reduction of deposit rate by also reducing interest rates on borrowing to encourage borrowing for investments.