The Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC) has increased Cash Reserve Ratio (CRR) from 22.5 per cent to 27.5 per cent.
The Governor of CBN, Mr Godwin Emefiele made this known while briefing newsmen on the outcome of MPC meeting in Abuja on Friday.
Emefiele disclosed that all 11 members of the committee attended the meeting while nine of them voted for the increase of CRR.
He explained that the committee was confident that increasing the CRR this time would help to address monetary induced inflation.
He said it would assist in retaining the benefits from banks’ loan to deposit ratio which he said had been sustained for increased credit to private sector as well as pursuing market interest rates downward.
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According to him, the MPC retained other parameters apart from the CRR.
He said the Monetary Policy Rate (MPR) was retained at 13.5 per cent and Liquidity Ratio at 30 per cent.
The governor stated that the committee also retained the Asymmetric Corridors at +200 and -500 basis points around the MPR. (NAN)
Cash Reserve Ratio (CRR) is a specified minimum amount of the total deposits of customers with Deposit Money Bank, which the banks have to hold as reserves as deposits with the Central Bank.
CRRis set according to the guidelines of the central bank of a country. It is often used as a monetary policy instrument to control inflation.
Recently, the National Bureau of Statistics released the Inflation rate for the month of December 2019 and the figures revealed that rate has increased for the 4th consecutive month since September 2019. From 11.24% in September 2019, 11.61% in October 2019, 11.85% in November 2019 and 11.96 in December 2019.
Although, the CBN and other economic watchers has blamed the persistent rise in Inflation on the land border closure by the federal government, this latest move by the CBN is seen as a step in the right direction coming from the custodian of the nation’s monetary policy.