The Central Bank’s Monetary Policy Committee (MPC) on Tuesday, March 26, voted to cut the monetary policy rate by 50 basis points to 13.5% for the first time since July 2016.
According to the Committee’s report read by the CBN governor, Godwin Emefiele, a consideration of developments in the global and domestic economy since its last meeting including weaker global growth momentum, dovish global central banks, and moderating U.S treasury yield, informed the decision.
On the domestic front, the Committee noted that the sustained drop in headline inflation rate, which as at February 2019 stood at 11.3% year-on-year, the elevated crude oil prices and stable production, foreign exchange stability amid strong external reserves, and sustained GDP growth were on the forefront of their decision to cut MPR by 50 basis points.
They also expressed satisfaction with the inflationary downtrend, and emphasized that growth remain largely fragile hence, the need to support ailing growth picture.
Against analysts consensus to hold rates, the Committee thus decided to cut Monetary Policy Rate (MPR) to 13.5%. They however maintained the asymmetric corridor around the MPR at +200/-500 basis points, while also holding Cash Reserves Ratio (CRR) at 22.5%; and keeping liquidity ratio at 30.0%.