© 2019 - International Centre for Investigative Reporting
CBN raises cash reserve ratio to 500 basis
THE Central Bank of Nigeria (CBN) on Friday raised the Cash Reserve Ratio (CRR) from 22.5 percent to 27.5 percent by 500 basis point as inflation rate continues to increase and slow liquidity.
This was part of the decisions taken at the meeting of CBN Monetary Policy Committee held in Abuja on Thursday and Friday respectively.
Releasing the outcome of the meeting on its official Twitter handle, the CBN MPC held that rate and other parameters were constant.
Cash Reserve Ratio is a specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves either in cash or as deposits with the central bank of Nigeria.
The MPC stated that Monetary Policy Rate (MPR) stood at 13.5 per cent, from 14 per cent in March 2019.
Addressing journalists at the end of the meeting, CBN governor, Godwin Emefiele said there were concerns that inflation was rising fast, pushed by both monetary and structural factors.
Emefiele also disclosed that the MPC expressed concerns on rising external and local debt and called on the federal government to rather raise revenues and depend less on oil receipts.
Nine out of eleven members of the MPC present at the meeting voted to alter the CRR.
In November 2019 during the last meeting of the committee, members unanimously voted to retain the Monetary Policy Rate (MPR) at 13.5 per cent and all other policy parameters constant.
It would be recalled that inflation moved up to 11.98 percent as at the last day of December 2019, the highest rate within that year and since May 2018.
The heightening inflation rate in 2019 was as a result of the increase in prices of food items and also the current border closure policy.
CBN fears that price risks could elevate following the take-off of the approved N30,000 minimum wage for civil servants.