Central Bank of Nigeria Cuts Rates, Boosts Liquidity

Money market rates in Nigeria eased as liquidity in the banking system increased to N7.45 trillion, a rise of 7.92% from N6.91 trillion. This change followed the Central Bank of Nigeria's 350-basis-point cut in its policy rate to 23% and the adjustment of the standing deposit facility floor to 20%.

AIICO (NGX: AIICO) Capital Limited reported that the overnight policy rate decreased by one percentage point to 21%, while the overnight lending rate fell by 51 basis points to 21.76%. The average Treasury bill rate also dropped to 18.38%.

The liquidity increase was supported by a N2.27 trillion inflow from matured Open Market Operation bills and higher utilization of the Standing Deposit Facility, which reached N7.34 trillion. The midweek Treasury bills auction saw subscriptions exceed N4.2 trillion against allotments of less than N500 billion.

Analysts expect short-term rates to remain under downward pressure due to the surplus liquidity.