Central Bank of Nigeria ‘masterstroke’ aims at two-pronged tightening

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The Central Bank of Nigeria (CBN) yesterday took analysts by surprise when it ratcheted up its cash reserve ratio (CRR) on public sector deposits from 12% to 50%, in an effort both to stem the build-up of oil-fuelled excess liquidity in the banking system and prod banks into raising private deposit interest rates.

The CRR on private sector deposits, and the monetary policy interest rate, were both left unchanged at 12%.

In a statement, the CBN expressed concern over "the rising cost of liquidity

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