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OBriefs Newsletter Vol1No5

HomePublicationsO-BriefsOBriefs Newsletter Vol1No5
HomePublicationsO-BriefsOBriefs Newsletter Vol1No5
In the last quarter of 2015, the CBN during its 2015 last Monetary Policy Committee (MPC) meeting cut the benchmark interest rate from 13 to 11 percent and reduced the Currency Reserve Ratio (CRR) from 25% to 20%.

The Monetary Policy Rate (MPR) is the key rate which drives interest rate in the country and with which the CBN lends money to the commercial banks. These policy decisions were geared at increasing liquidity. Relaxation of CBN’s monetary tightening policy is supposed to allow banks access to more funds for investment in the general economy but there is little sign that liquidity is increasing in the general economy. Three things should, therefore, be clear to CBN by now. First is that they should stop propping up the Naira. Second is that given current economic realities, CBN’s use of the foreign reserves and capital controls to support the naira cannot be sustainable in the long run.

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