CBN raises interest rate benchmark to 12%

THE Central Bank of Nigeria (CBN), has increased the interest rate benchmark, the Monetary Policy Rate (MPR), to 12 per cent as it jacked up the Cash Reserve Requirement (CRR) to eight per cent.The increase is in response to the apex bank's concern about the unusual developments in the global and domestic economy, with potential negative impact on domestic liquidity conditions and renewed threats to price and exchange rate stability.Briefing the media at the end of the extraordinary Monetary Policy Committee meeting on Monday in Abuja, the CBN governor, Mallam Sanusi Lamido Sanusi, said the committee jacked up the Monetary Policy Rate (MPR) by 275 basic points from 9.25 per cent to 12.0 per cent by a vote of eight in favour and one in favour of status quo.Also the cash reserve ratio (CRR) was increased from 4.0 per cent to 8.0 per cent from the maintenance period beginning from tomorrow by a vote of seven to two.Mallam Sanusi said the net open position was reduced from 5.0 per cent to 1.0 per cent of shareholders funds with immediate effect and with full compliance by Friday, October 14, by unanimous vote.He said it was further agreed that the reserve averaging method of computation be suspended in favour of daily maintenance until further notice.Reviewing the domestic economy, he said the growth outlook for the economy did not appear to have changed much, driven largely by the positive forecasts for the non-oil sector as noted in the last communiqu.He said Inflation had come down to 9.3 per cent in August but, as indicated in the same communiqu, a combination of monetary, fiscal and structural factors continued to advise against complacency.At the same time, the CBN governor said the naira had come under increasing pressure and had recently traded outside the band of N150 +/- 3.0 per cent.In the committee's view, Malam Sanusi said the increasing pressure on the domestic currency had been emanating from a number of sources, not all of which could be addressed by purely monetary interventions.
Click here to read full news..