If a bank cannot meet these liquidity requirements, it will need to borrow money in the interbank market to cover the shortfall. A drop in the interbank rate signals high liquidity in the market which should, ideally, translate into an uptick in private sector credit. SEE ALSO: State took the lazy option on schools crisis, now experts say“The money market was liquid during the week ending July 9, supported by government payments, which offset tax receipts. Moreover, CBK’s Monetary Policy Committee - its highest decision-making organ - has considerably reduced its benchmark lending rate in what was aimed at freeing cheap cash for onward lending to businesses and households. While slashing its benchmark lending rate and CRR last month, the Central Bank said it would also monitor the interbank rate to ensure that banks are liquid enough to keep lending to the public.

Source: Standard Digital July 13, 2020 21:00 UTC