Updated: CBN Makes First Policy Decisions Under President Tinubu, One Month After Emefiele's Removal

• The Central Bank under the leadership of Folashodun Shonubi, the acting governor has made its first monetary policy decision
• The apex bank has decided to increase the all the MPC parameters used for money supply and economic growth
• Monetary policy is a set of tools used by a nation's central bank to control the overall money supply and promote economic growth

The Central Bank of Nigeria has made its first monetary policy decision under the administration of President Bola Tinubu.

After a two-day meeting, Folashodun Shonubi, the acting governor announced on Tuesday, July 25, 2023 that the Monetary Policy Committee (MPC) has decided to increase interest rate again to 18.75%.

This is a 25 basis points increase from the initial 18.5% agreed under the suspended CBN governor, Godwin Emefiele.

It is also the highest level in 22 years, Punch reports.

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Other decision take by the CBN

CBN also raised asymmetric corridor of +100/-300 basis points around the MPR.

The symmetric/asymmetric corridor is set around the MPR (the lower bound rate at which excess reserves are deposited with the Central Bank and the upper bound at which banks borrow from the Central Bank).

Also CBN made the decision to retained the cash reserve ratio (CRR) for commercial banks at 32.5 per cent.

CRR is also the minimum amount of deposit commercial banks holds with CBN

Furthermore, CBN retained the Liquidity Ratio at 30.0 per cent.

Liquidity ratios are metrics used to determine a debtor's ability to pay off current debt obligations without raising external capital.

Snapshot of CBN decisions

• The MPR(Interest rate) was increased by 25 basis points to 18.75%
• The asymmetric corridor was narrowed to +100/-300 basis points around the MPR from +100/-700 basis points
• CRR was retained at 32.5%
• The liquidity Ratio was also kept at 30%

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CBN faces another headache as Nigeria’s foreign reserves fall to 2-year low

Meanwhile in another report, Legit.ng revealed that Nigeria's foreign reserves is now at a two year low.

The latest data from the CBN shows that Nigeria's reserves drop to $33 billion amid reduced earnings from crude oil sales.

The foreign reserves is a key firepower for CBN in its fight to ensure naira stay strong against other currencies.

Source: Legit.ng