The Central Bank of Nigeria’s Monetary Policy Committee will kick off its two-day meeting in Abuja on Monday,September 21, where most of its members will be expected to vote for a reduction in the cash reserve requirement (CRR) in order to ease liquidity in the system.
The members of the committee will also be expected to decide on whether to keep the monetary policy rate (MPR) unchanged at 13 per cent. The tweaking of the CRR is the fallout of the implementation of the treasury single account (TSA) on the financial system.
The CRR is a specified minimum fraction of total customers’ deposits, which commercial banks have to hold as reserves either in cash or as deposits with the central bank. Presently it is set at 31 per cent for both private and public sector funds.
An industry source who spoke on condition of anonymity said: “What the central bank did was to repay a portion of the CRR back to the banks on Friday. That is, the CBN returned 31 per cent of what each bank transferred to the TSA to them. We believe that is going to strengthen the liquidity position of the market this week.”
The two-day meeting, which would be fifth this year and the 246th meeting of the MPC, would consider domestic and international economic and financial conditions in order to decide on monetary policies that have a macro impact on the economy.