Businessmen in Nigeria can heave a sigh of relief as the Central Bank of Nigeria (CBN) has reduced the Monetary Policy Rate (MPR) from 14% to 13.5%, the first reduction since 2016.
Announcing the slight drop in interest rate at a media briefing after the apex bank’s Monetary Policy Committee (MPC) in Abuja, the CBN Governor, Mr Godwin Emefiele said the reduction would also manage investor sentiments in terms of capital inflows.
The committee, which holds a meeting once in three months, first set the benchmark interest rate at 14% in July 2016 to combat inflation and improve investor attitudes towards bringing in new capital. The country was in a recession at that time.
Simply put, the monetary policy rate is the baseline interest rate in an economy.
Every other interest rate used within an economy is built on the MPR.
At its January meeting, the committee had said that the chances of loosening were remote although it said tightening would “result in the loss of the gains so far achieved.”