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Reduction of lending rate’ll promote economic growth – CBN Gov



GOVERNOR of the Central Bank of Nigeria (CBN), Godwin Emefiele has said that reduction of the benchmark lending rate from 14 percent to 13.5 percent by the Monetary Policy Committee (MPC) is to further promote economic growth.
Emefiele, who was briefed newsmen on the outcome of the 266th MPC meeting, said all 11 members were present at the meeting and six out of 11 of them voted to reduce the Monetary Policy Rate, MPR, by 50 basis point, which is the first time the rate has been altered since July 2016.
He explained that two members voted to reduce the MPR by 25 basis point, another two members voted to hold the MPR at 14 percent while one member voted to reduce it by 100 basis point and that 10 members voted to hold all other parameters at the present rate, while only one member voted to reduce the cash reserve ratio.
To this effect, he said the Cash Reserves Ratio, CRR, remain unchanged at 22.5 percent, liquidity at 30 percent and Asymmetric corridor at +200 and -500 basis points around the MPR.
“The committee felt that given the relative stability in the key macroeconomic variables, there is a need to signal a new direction and in which case we are talking about being pro-growth.
“In its argument the committee was convinced that doing this would further uphold the bank’s commitment to promoting strong growth by way of encouraging credit flow to the productive sector of the economy…”
On the overall outlook and risks, the CBN governor said forecasts of key macroeconomic variables indicate a positive outlook for the economy in 2019.
He said that the committee also harped on the need to debase the Gross Domestic Product, (GDP), of the country, which was last carried out in 2010.
“The committee, however, expressed concern and sympathises with the fiscal authorities over the growing fiscal debt, fiscal deficit, external debt and debt servicing.
“The committee also noted the improvement in financial systems stability and the soundness in key financial indicators.
Emefiele reiterated the apex bank’s commitment to providing the necessary leverage to support economic growth and development in the country.

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