By Joshua Elekwachi, Abuja
Bank of Nigeria (CBN) is set to reconvene next week for its periodic Monetary Policy Committee (MPC).
The notice of the meeting was released by the apex bank on its official website on Tuesday.
According to the notice of the scheduled meeting, the 275th MPC meeting will hold next week (September 21and 22rd) 2020.
The MPC is the CBN’s highest monetary policy decision-making body. It comprises the governor of the Bank who shall be the chairman, the four deputy governors of the Bank, two members of the board of directors of the Bank, three members appointed by the president, and two members appointed by the governor.
The MPC sets monetary policy for banks in the country through decisions on the Monetary Policy Rate (MPR), Cash Reserve Ratio (CRR) and Liquidity ratio.
These variables determine the quantum of funds that the banks have at their disposal to lend.
The MPR is the rate at which the CBN lends to banks. This, in turn, determines the interest rate banks charge members of the public.
The Central Bank’s MPC meeting last held in July 2020 where all key rates were left unchanged. Basically, the MPR was kept at 12.50 per cent, while other parameters were also held respectively as follows:
The asymmetric corridor of +200/-500 basis points around the MPR s retained; CRR was held 27.5per cent; and the Liquidity Ratio was also kept at 30 per cent.
While explaining reasons for hold rates, the MPC also noted that lowering rates would aggressively restart the capital activities, and stimulate growth. On the other hand, MPC noted there is a need to restrain from loosening in order not to exacerbate inflationary pressures.
The CBN’s recent policy ordering all banks to maintain a minimum loan to deposit ratio of 60 per cent by September 2019, aimed at improving lending to the real sector will be an important factor in the MPC’s decision.
“Hence, investors will be eagerly anticipating decisions at the meeting which may likely consolidate recent policy moves by the CBN,” analysts explained to Nigerian NewsDirect.