The Monetary Policy Committee (MPC) of the Central Bank of Nigeria
(CBN) has increased the Monetary Policy Rate, also known as the interest rate, to 18.5 per cent from 18 per cent, representing its highest level in 22 years.
In the last meeting held in March, the CBN had moved the interest rate up from 17.5 per cent to 18 per cent. The financial regulator has been raising the rate since April 2022, when the MPR was 11.5 per cent.
Speaking after the meeting on Wednesday in Abuja, Governor of the CBN, Godwin Emefiele said the decision to increase the benchmark interest rate is made on the back of the rising inflation rate in the Nigerian economy, despite the tight monetary policy stance adopted since its May 2022 meeting, inflation had not decelerated towards the Bank’s long run objective.
Headline inflation rose to 22.22 per cent in April 2023 from 22.04 per cent recorded in the previous month, representing its highest level since September 2005.
Emefiele stated that it has unanimously voted to hike its monetary policy rates or interest rates by 50 basis points, as 10 members voted for a 50 basis point hike and 1 member 25 basis point.
Other indices include the asymmetric corridor of +100/-700 basis points around the MPR was retained, CRR was retained at 32.5 per cent, while the Liquidity Ratio was also kept at 30 per cent.