The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has left the Monetary Policy Rate at 14% and other parameters unchanged.
MPR was thus left at 14%, Cash Reserve Ratio CRR at 22.5% and Liquidity Ratio at 30%. The asymmetric corridor for the MPR was also left at +200/-500 basis points.
The Monetary Policy Rate (MPR) is the rate at which the CBN lends to commercial banks. This, in turn, provides a benchmark at which the banks lend to the public. The Cash Reserve Ratio (CRR) is the proportion of a bank’s deposits it has to hold as deposits either in cash or with the CBN.
Liquidity ratio is the ratio of a bank’s liquid assets to its liabilities. In other words, a bank’s cash balance plus assets that it can easily convert to cash to the total liabilities owed by the bank, which is typically deposits.