Nigeria retains interbank rate at 12 percent

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Nigeria has retained the Monetary Policy Rate (MPR) at 12 percent with a corridor of 200 basis points around the midpoint, the Central Bank of Nigeria (CBN) announced on Saturday.The Governor of the CBN, Mr. Godwin Emefiele, announced at the end of the 97th Monetary Policy Committee meeting in Abuja on Friday that the public sector Cash Reserve Requirement and the Private sector Cash Requirement would remain at 75.0 percent and 15.0 percent respectively.
He explained that banks were holding large excess reserves averaging over N300 billion (about $2bn) in spite of ample opportunities for productive and profitable lending to the real sector of the economy.
“The situation is made worse with the injection of an additional N866 billion (about $5.7bn) into the system through the redemption of maturing AMCON bonds in October,” he said.
Emefiele, who banks to explore ways to lend such excess reserves to the real sector, warned that the monetary regulators could be forced to further tighten monetary policy, especially if the banks continue to defy entreaties to lend to the real sectors of the economy.
“Ordinarily, because of the size of liquidity we see in the system today, what we should have done actually is to tighten further but we would continue to monitor the liquidity system,� he said.
“I can assure you that what we say in our agenda that interest rate would gradually come down is an objective that we would eventually pursue but we would continue to monitor what is happening in the Nigerian economy and all the parameters to determine whether or not we’ve attained the right time to move in that direction,” Emefiele added.