The Central Bank of Nigeria (CBN) decided to introduce various measures aimed at reducing inter-bank lending rates and improving liquidity in the financial system during its Monetary Policy Committee meeting on Tuesday.

Business Day reports that the Monetary Policy Rate (MPR) was reduced from 8% to 6%, a 200 basis point reduction. Most analysts expected a maximum of 100 point reduction.

The reduction of the MPR – the rate at which the CBN lends to banks – is an indication that there is a need to further ease monetary policy

In an effort to address the tight liquidity amongst banks, the CBN announced that it will guarantee all inter-bank lending as well as placements with banks by pension funds until the end of March 2010.