By Tanko Mohammed
The Central Bank of Nigeria (CBN) has decided to dip interest rates on its facilities through participating Other Financial Institutions (OFI).
The decision to cut the rate from nine per cent to five per cent per annum for one-year, effective March 1, 2020 is to cushion the effect of COVID-19 on households, businesses and regulated institutions.
The bank made the announcement through a circular by the Director, Financial Policy and Regulation Department, Mr. Kevin Amugo.
CBN posted the decision on its website with an explanation that the intervention facilities obtained through participating OFIs – Microfinance Banks (MFBs), Primary Mortgage Banks and institutions, among others.
The bank said OFIs have also been granted leave to consider temporary and time limited restructuring of the tenor and loan terms for households and businesses.
The Director, Corporate Communications Department of CBN, Mr Isaac Okoroafor, also reported that the approval was in line with the bank’s desire to alleviate momentary strain on households, businesses and regulated institutions.
Meanwhile, some economists and financial market analysts have predicted that the CBN Monetary Policy Committee (MPC) would leave the benchmark monetary policy rate (MPR) and other tools unchanged at their meeting in Abuja, on May 28, 2020.
The committee had also left both the Cash Reserve Ratio (CRR) and Liquidity Ratio unchanged at 27.5 per cent and 30 per cent respectively. MPR is the rate at which CBN lends to commercial banks and often determines the cost of borrowing in the economy.
