At today’s Monetary Policy Committe (MPC) meeting, members of the committee decided to leave the Monetary Policy Rate (MPR) and other variables unchanged. The MPR was left at 14%, liquidity ratio at 30% and Cash Reserve Ratio (CRR) at 22.5%. The asymmetric corridor was left at +200bps and -500 basis points around the rate.

The MPR is the rate at which the CBN lends to financial institutions. The MPR serves as a benchmark by which banks and other financial institutions in the country lend to individuals and businesses. Liquidity ratio is the proportion of bank assets that are expected to be held in cash or near liquid cash. Cash Reserve Ratio is the amount of cash that banks are expected to keep with the Central Bank of Nigeria (CBN). The CBN adjusts the various rates in order to control the volume of money within the financial system. The asymmetric corridor is the limit within which the interest rates can be adjusted.


Why the rates were left unchanged

During a press briefing after the meeting, CBN Governor Godwin Emefiele stated that the rates were unchanged in order to ensure stability in the economy. A reduction in the rates would have left interest rates negative in real terms. Inflation rates are currently 16.1%, higher than interest rates

Implications of the hold decision

The financial markets had already factored a likely hold decision, so markets did not react. Businesses that were expecting a drop in the MPR, which would have reduced lending rates may have to wait a while. Holders of money market securities will also be happy with the decision as a drop in rates would have led to a drop in rates for treasury bills.

Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training. He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE). He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy. You can contact him via


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