The Central Bank of Nigeria on Thursday reduced its monetary policy rate to 12.5 percent as part of efforts to combat the economic effects of the coronavirus pandemic.
The previous rate was 13.50 percent.
However, the bank retained its Cash Reserve Ratio (CRR) at 27.5 percent and Liquidity Ratio (LR) at 30 percent.
MPR is the interest rate at which CBN lends to the commercial banks and also the benchmark against which other lending rates in the economy are pegged.
A reduction in the MPR rate tends to make lending cheaper and helps to further stimulate the economy.
CBN Governor, Godwin Emefiele, announced the reduction during a Monetary Policy Council briefing on Thursday.
Seven members voted to cut the MPR by 100 basis points, while two members voted for a 150bps rate cut, with one member electing for a 200bps rate cut, the Governor said.
Mr Emefiele added that the asymmetric corridor around the MPR will remain at +200/-500bps, while the Cash Reserves Ratio (CRR) at 27.5 percent and
Liquidity Ratio (LR) at 30 percent.
The Committee also considered developments in the global and domestic economy since its last meeting including, the negative impact of COVID-19 on global growth and the responses of global central banks’ to the COVID-19.
On the domestic front, the Committee noted that sustained inflationary pressure (April: +8bps to 12.34% y/y), and weaker but still positive output growth in Q1-2020, as well as a sustained decline in manufacturing PMI.