CBN Increases Interest Rate To 18.50%
Central Bank of Nigeria Takes Bold Steps to Combat Inflation with Interest Rate Increase to 18.5%
In a move aimed at curbing the rising inflation in Nigeria, the Central Bank of Nigeria’s Monetary Policy Committee (MPC) has announced a further increase in the interest rate from 18 percent to 18.5 percent.
This decision was disclosed by Godwin Emefiele, the Governor of the Central Bank of Nigeria, during the presentation and analysis of the MPC communique on Wednesday.
Emefiele emphasized that the global nature of inflationary pressures necessitated decisive action. He stated, “Our actions to increase the MPR rates are potent because the inflationary pressures you see today confronting us are a global phenomenon and this started in 2022.”
“The committee members unanimously voted to raise the rate by 50 basis points to 18.5 percent. Additionally, they decided to retain the asymmetric corridor at +100 and -700 basis points around the Monetary Policy Rate (MPR), while keeping the cash reserve ratio (CRR) at 32.5 percent and the liquidity ratio at 30 percent.
Emefiele stressed that the Central Bank would closely monitor the ongoing price developments and collaborate extensively with the fiscal authority to address the underlying causes of inflation.
He acknowledged that while the persistent rise in headline inflation remained a significant challenge for the economy, other macroeconomic indicators were moving in the right direction, despite the presence of certain headwinds.
This recent increase in the interest rate follows the MPC’s decision in March to raise the MPR from 17.5 to 18 percent in an effort to combat inflation. Despite these successive hikes in the MPR since May of the previous year, Nigeria’s inflation rate rose to 22.22 percent in April 2023, according to the National Bureau of Statistics.
The Monetary Policy Rate (MPR) serves as the benchmark interest rate in an economy, upon which other interest rates within the same economy are determined.
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