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COVID-19: CBN supports economy with N33bn, retains 11.5 percent interest rate

Mr. Godwin Emefiele, Governor of CBN

*The Central Bank of Nigeria pledges to extend the interest rate of five percent on the CBN intervention funds by a year, as the Bank discloses it disbursed total N33 billion to support the economy during the COVID-19 economic recovery

Isola Moses | ConsumerConnect

In view of recent increases in cases during the second wave of the Coronavirus (COVID-19) pandemic, Mr. Godwin Emefiele, Governor of the Central Bank of Nigeria (CBN), has frowned on any plan by authorities to place the country under another lockdown.

Emefiele, at a briefing at the end of the Monetary Policy Committee (MPC) meeting Tuesday, January 26 in Abuja, FCT, said such a move at this time would wreck the economy and people’s means of livelihood, however, pledged that the apex bank would extend the five percent interest rate on loan repayment by a year to March 31, 2022.

The CBN Chief noted that members agreed to retain the Monetary Policy Rates (MPR) at 11.5 percent, the asymmetric corridor, at +100/-700 basis points around the MPR, CRR at 27.5 percent and retain the Liquidity Ratio at 30 percent.

Recall Bankers’ Bank February 2020 had agreed to reduce the interest rate on all its intervention funds from nine percent to five percent for a year effective from March 1, 2020.

On the possibility of another extension, considering the rampaging pestilence in the land as of now, Emefiele is positive, especially against the backdrop of the second wave of the pandemic that has affected the Nigerian economy.

He stated: “On interest rate of 5 percent concession in March, we would extend by 12 months again, the interest rate of five percent on the CBN intervention funds.

“This is the CBN’s contribution to the economy and any action that would support the growth of the economy is what we will do.”

The MPC also urged the banks to boost lending to aid recovery.

Emefiele warned exporters not to leave their Dollars overseas but repatriate it back home for others to lend from it.

“It is not every time that people will be pestering the CBN for Dollars. If you’re an exporter, repatriate your dollars. Don’t leave it overseas.”

The MPC said it was faced with the dilemma of stagflation, inflationary pressure and to continue reversing price stability.

He observed that with price stability as its major mandate, the CBN would focus on reducing inflation rates which have continued on its upward trajectory.

The inflation cannot be put at the feet of monetary authorities, said he.

ConsumerConnect reports the Consumer Price Index, (CPI) increased by 15.75 percent (year-on-year) December 2020.

The development was essentially driven by food prices with food inflation rising to 19.56 percent, caused by increases in prices of food items, such as bread and cereals, potatoes, yam and other tubers, meat, fruits, vegetable, fish and oils and fats.

According to Emefiele, a total sum of N33 billion has been spent to support the economy badly hit by impact of the COVID-19 pandemic thus far.

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