Central Bank of Nigeria Slashes Monetary Policy Rate

April 9, 2009

Nigeria’s benchmark central bank rate was cut by 175 basis points to 8.0%.  Monetary officials also reduced the liquidity ration to 25% from 30% and the cash reserve requirement to 1% from 2%.  This was the second easing of policy.  Last September 18th, officials cut their interest rate by 50 bps from 10.25% where such had stood since early June, and they also halved the cash reserve requirement from 4% and reduced the liquidity ratio from 40%.

Today’s move by the central bank was controversial.  Nigeria’s currency, the naira, had depreciated over 20% since November, the Nigerian credit rating was downgraded last month by S&P, and CPI inflation accelerated to 14.6% in February, well above the central bank rate.  A statement from the central bank cited tight liquidity, a slowdown of growth for this major oil exporter, softer credit growth, and higher market interest rates to explain the easing of policy.

Copyright 2009 Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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This entry was posted on Thursday, April 9th, 2009 at 2:42 pm and is filed under Central Bank Watch. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

One Response to “Central Bank of Nigeria Slashes Monetary Policy Rate”

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