CBN Stands Firm On LDR Policy To Curb Inflation.
Central Bank of Nigeria has again justified its reliance on the Loan Deposit Ratio to control the country’s rising inflation.
The apex bank also said it is ready to do whatever it takes to reduce the inflation rate.
CBN’s Acting Director of the Banking Supervision Department, Dr Adetona Adedeji, disclosed this in ‘CBN Talk Today’, a podcast recently uploaded to the bank’s website titled “Loan to Deposit Ratio Adjustment.”
CBN had reduced the LDR of banks from the previous 65 per cent to 50 per cent, a move the regulator said would stabilise the economy.
Adedeji said the use of LDR as a control measure for inflation started in 2019 when it was observed there was a massive slowdown in credit growth.
Speaking about the nexus between the LDR and rising inflation, he said the last Monetary Policy Committee decided to purge the financial system of excess cash by raising Monetary Policy Rate.
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