The Central Bank of Nigeria [CBN] has raised the national interest rate from 12 percent to 14 percent — the highest in 10 years.
This is one of the several efforts by the CBN governor, Godwin Emefiele to save the economy as well as his job.
Recently, there have been calls for the sack of Emefiele for incompetence as the Naira now exchanging at about 375 Naira to the dollar.
The Monetary Policy Committee of CBN, on Tuesday, said, it was tightening the monetary policy by increasing the monetary policy rate by 200 basis points from 12 per cent to 14 per cent.
It, however, did not alter Cash Reserve Ratio and the Liquidity Ratio, which will remain at 22.5 per cent and 30 per cent respectively.
Godwin Emefiele made this public in a communiqué issued at the end of a two day monetary.
According to the communiqué, the Monetary Policy Rate is the anchor rate at which the CBN, in performing its role as lender of last resort, lends to Deposit Money Banks to boost the level of liquidity in the banking system.
Thus, when the apex bank intends to increase the level of liquidity in the economy, it reduces the MPR but increases it when it intends to tighten money supply.
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