CBN Retains Key Lending Rate, Discusses Removal of Subsidy Linked Inflation

At its Monetary Policy Committee (MPC) meeting held in Abuja today, the CBN decided to retain the key lending rate unchanged at 12%.

Also the Cash Reserve Ratio was retained at 8%.

Analysts did not expect the apex bank to make any significant changes to the MPR today, since it had already increased the rate by 275 basis points at its last sitting.

The Committee also discussed the planned removal of the oil subsidy by the Federal Government. Discussions on this subject matter centered on inflation, and what the MPC described as the “ever-present” “risk” of inflation from the removal of the hitherto average Nigerian welfare package.

The CBN stated categorically that it would not intervene via the use of Monetary Policy during the “first round shocks” destined to be experienced by Nigerians if or when the Presidency goes ahead with its plan.

The CBN also remarked that the banks were improving on their fixed deposit product return rates, stating that the “average weighted deposit rate” had climbed from 5.49% in September to 7.06% in October.

The MPC also decided to adjust the target official exchange rate to N155/$1 and maintain the +/- 3% band.