Central Bank of Nigeria Monetary Policy Committee has has raised the monetary policy rate (MPR), which is the barometer for interest rate charged by banks is the country from 13 per cent to 14 per cent. The new 100bps hike in the Monetary Policy Rate (MPR) to 14.0% is a 250bps hike in the space of two months. The decision was necessitated by the need to curb spiralling domestic inflation rate which hit 18.6% y/y (a 65-month high) in June 2022. The new rate means that banks will now charge interest on loans to customer above 14 per cent. Mr Godwin Emefiele, Governor of the CBN made this known at a press briefing on the outcome of the 286th monetary policy committee meeting.
The Policy rate, which was pegged at 11.5% for over two years, was raised to 13% in May to tackle rising inflation, according to Emefiele. Meanwhile, the committee retained the asymmetric corridor at +100/–700 basis points around the MPR, retained the Credit Reserve Ratio (CRR) at 27.5% as well as liquidity ratio at 30%. According to the CBN Governor at the press briefing, raising the interest rate was the right option considering economic realities. He said “the committee resolved that the most rational policy option would be to further strengthen its tightening stance in order to effectively curtail the unabated rising trend of inflation,” Emefiele said.
Continuing he said “members were conscious of the fact that output growth remained fragile. However, not curtailing inflation now could erode the monetary gains achieved in improving consumer purchasing power and thus worsen the poverty level for the vulnerable populace. The Committee thus vote unanimously to raise the Monetary Policy Rate (MPR). One member voted to increase the MPR by 150 basis points, six members by 100 basis points, one member by 75 basis points and three members by 50 basis points. Consequently, Committee resolved to increase the MPR by 100 basis points from 13 per cent to 14 per cent. In summary, MPC voted as follows; increase MPR to 14% from 13, retain the Asymmetric Corridor at +100 and -700 basis points around the MPR, retain the CRR at 27.5 per cent and retain liquidity ratio at 30 per cent,” Emefiele said.
