The Monetary Policy Committee (MPC) of the Central Bank of Nigeria has increased its benchmark interest rate (MPR) for the third time this year by 50 basis points to 18.5 in its recently concluded MPC meeting.
This was revealed by the governor of the CBN, Godwin Emefiele at thepostMPC press briefing held on Wednesday24th, 2023.
The decision of the CBN is made on the back of the rising inflation rate in the Nigerian economy.
Headline inflation rose to 22.22 in April2023 from 22.04 recorded in the previous month, representing its highest level since September 2005.
CBNs interest rate at 18.5 represents its highest level in 22 years.
Context The central bank Governor 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. The CBN opined reducing MPR was not even considered and that a hold will be counterfactual to evidence on the ground.
They also cited evidence that raising rates was reducing inflation which may have risen to as high as 32 as against 22.22 if rates were not aggressively raised in April
Highlights of the Committees Decision Increase MPR by 50basis points to 18.5The asymmetric corridor of 100/700 basis points around the MPR was retainedCRR was retained at 32.5While the Liquidity Ratio was also kept at 30
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