AT LAST NIGERIA CUTS INTEREST RATE

For the first time in almost 4 years, the Central Bank of Nigeria, on Tuesday March 26, cut bench mark interest rate from 14% to 13.5%.

This was at the end of its 266th Monetary Policy Committee meeting which started on Monday and concluded on Tuesday.

The cut may not offer great relief to Nigeria's industrial sector especially but it is significant because it is the first cut since September 2015.

Hitherto, the MPC had shied away from reducing the admittedly high bench mark for fear that it could stop being the magnet for needed foreign inflow even if of the short term kind. It was also weary of slow drop in the Nation's double digit inflation rate.

Hence, instead of cutting the rates, the CBN resorted to different levels of intervention funds to as much as possible give preferred sectors the chance to access cheaper loans.

The change of heart became necessary at last because foreign portfolio in flows in recent months have been more encouraging, Nigeria's inflation continues to edge down  albeit slowly and equally slow economic  growth at least was being sustained.

The MPC also put into consideration fairly high crude oil prices at the world market, weaker global economic growth and the fact that the US rates are now expected to remain unchanged for the rest of this year 

The inflation rate as at February, according to the bureau of statistics, was down marginally to 11.3%, year on year, well below even the new benchmark rate.

The 266th meeting set Cash Reserve ratio at 22.5% and liquidity ratio at 30%.

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