Cbn rejects finance ministers call interest rate cut pegs lending rate 14

It appears that the Central Bank of Nigeria (CBN) has rejected the call by the Finance Minister, Zainab Ahmed, to cut interest rates. Instead, the CBN has maintained the lending rate at 14%.

Here's a possible reason for this decision:

The CBN may be concerned about inflationary pressures and the potential impact of a rate cut on the naira's value. With inflation still above the target range, the CBN may want to maintain a tight monetary policy stance to keep inflation in check.

Additionally, the CBN may be concerned about the potential impact of a rate cut on the stability of the financial system. With the economy still recovering from the COVID-19 pandemic, the CBN may want to maintain a cautious approach to ensure that the financial system remains stable.

It's worth noting that the CBN has been gradually reducing the monetary policy rate (MPR) over the past few years, from 14% in 2016 to 12.5% in 2019. However, the CBN has maintained the MPR at 12.5% since then, despite calls for a further rate cut.

The decision to maintain the lending rate at 14% may also be influenced by the CBN's desire to support the naira's value. With the naira under pressure due to a decline in foreign exchange reserves, the CBN may want to maintain a tight monetary policy stance to support the currency's value.

Overall, the CBN's decision to maintain the lending rate at 14% may be seen as a cautious approach to managing the economy, given the ongoing challenges facing the country.