Updated: CBN raises CRR to 27.5%

With eyes on rising inflation and surging liquidity, the Central Bank Nigeria (CBN) on Friday moved against wide projections by analysts and raised the Cash Reserve Ratio (CRR) by 500 basis points.

But it retained the Monetary Policy Rate (MPR) at 13.5%, citing comfort with its policies so far and the need to yet again, allow time to understand growth trend for the year.

The CBN also left the Liquidity Ratio (LR) steady at 30% as well as the Assymetric corridor around the MPR at +200/-500 basis points.

Inflation moved up to 11.98 percent (year-on-year) in December 2019, the highest rate within that year and also since May 2018. Authorities blame heightening inflation which have come through largely food and also core – on the current border closure policy.

Inflation remains above the apex bank’s 6 percent to 9 percent target band with fears that price risks could elevate following the take-off of the approved N30,000 minimum wage, the over a trillion naira liquidity into the economy on the back of 65% Loan to Deposit Ratio policy and also an expected early commencement of 2020 budget implementation.

At the end of the first MPC meeting for the year, Governor Godwin Emefiele told reporters Friday in Abuja that there were concerns at the meeting that inflation was rising fast pushed by both monetary and structural factors.

“Inflation above the 12% will be inimical to output growth,” Emefiele stated.

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Emefiele also.expressed the MPC concerns on rising debt and called government to rather raise revenues and depend less on oil receipts

Nine members of the 11 present voted to alter the CRR.

At the last meeting in November 2019, Committee members unanimously voted to retain the Monetary Policy Rate (MPR) at 13.5 per cent and all other policy parameters constant.

Details shortly ….

Onyinye Nwachukwu, Abuja and Hope Moses-Ashike, lagos

Hope Moses-Ashike

Hope Moses-Ashike is an Associate Editor, Banking and Finance, with more than a decade of experience reporting on Nigeria’s financial system and broader economy. She closely tracks market movements, monetary policy decisions, company disclosures, regulatory actions, economic indicators, and global developments, and interprets what they mean for businesses, investors, policymakers, and households. Her reporting helps readers understand complex issues such as inflation trends, foreign exchange market dynamics, interest rate decisions, bank performance, and investment risks. She also covers major international events and periodically travels to Washington, D.C., to report on the World Bank/IMF Spring and Annual Meetings. Her dedication to financial journalism has earned her multiple recognitions and invitations to high-level professional development programmes. She is an alumna of the International Visitors Leadership Programme (IVLP) in the United States and holds an Advanced Financial Journalism Certificate from the Press Association Training in London, UK. Her other notable achievements include completing the Lagos Business School CMC Programme, the Bloomberg Media Africa Initiative Programme, and a Master Class in Journalism at Rhodes University in South Africa.