Mr Wale Adegbite, a former Chairman, Manufacturers Association of Nigeria, Ogun Chapter, has urged the CBN to also reduce the Cash Reserve Ratio (CRR) to make the reduction of the Monetary Policy Rate (MPR) meaningful
Adegbite gave the suggestion on Friday in Otta in an interview with the News Agency of Nigeria (NAN) in Ota.
He said that the reduction of the CCR would free more funds from the CBN for manufacturers who were in need of funds.
Adepite was reacting to CBN Governor, Mr Godwin Emefiele, who announced a reduction the MPR from 14 per cent to 13.5 per cent after its Monetary Policy Committee (MPC) meeting on Tuesday in Abuja.
NAN reports that this is the first time the lending rate has been altered since July 2016.
He said that the retention of the CRR at 22.5 per cent and Liquidity Ratio (LR) at 30 per cent would not achieve the desired purpose.
According to him, the objective of the CBN in reducing the lending rate is to reduce the lending rate to encourage people to borrow more.
Adepite said the reduction in the MPR without a reduction in the CRR would not achieve the objective.
“This is because the banks always complain that 30 to 40 per cent of their deposits were locked up in the CBN due to high CRR at 22.5 per cent.
“It will be difficult to achieve these set goals if the CRR is not reduced simultaneously with the lending rate.
“Banks are always complaining that the bulk of their loanable funds were kept by the apex bank.
“The reduction in the CRR will make it easier to lend more to the industrial sector or companies if the CRR is reduced,” he said.
