Nigeria Cuts Benchmark Interest Rate To 9.75 Pct

In order to lubricate the system, the MPC has decided to ensure that the financial system remains liquid.

Nigeria's Monetary Policy Committee decided at an emergency meeting to cut its benchmark interest rate to 9.75 percent from 10.25 percent to provide more liquidity to the financial market, the central bank said on Thursday.

The committee injected about 150 billion naira (around $1.27 billion) into sub-Saharan Africa's second biggest economy and reduced the cash reserve requirement to 2 percent from 4 percent.

"In order to lubricate the system, the MPC has decided to ensure that the financial system remains liquid," said Central Bank Governor Chukwuma Soludo.

The bank also lowered its liquidity ratio to 30 percent from 40 percent, and said it would allow repo transactions against eligible securities for 90 days, 180 days and 360 days.

The bank in recent weeks has faced a persistent liquidity crunch that pushed up interbank lending rates to 20 percent for overnight placement earlier this week.