CBN Raises Interest Rate to 14%

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) yesterday raised the interest Monetary Policy Rate (MPR) by 100 basis points from 13 per cent to 14 per cent, citing rising inflationary pressure across the world.

The change, which was included in the MPC’s 286th meeting’s final resolutions and took place in Lagos, occurred exactly two months after the committee had increased the MPR from its previous level of 11.5 percent by 150 basis points at its previous meeting in May.

The CBN Governor and Chairman of the MPC, Mr. Godwin Emefiele, cautioned that the MPC would continue to hike benchmark interest rates as long as inflationary pressure persisted during a media conference at the conclusion of the two-day meeting.

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However, the Committee retained the asymmetric corridor at +100 and -700 basis points around the MPR, retained the cash reserve requirement (CRR) at 27.5 per cent and retained the liquidity ratio at 30 per cent.

Emefiele explained that the decision to raise the MPR was reached due to MPC members’ concerns about rising inflation which had risen to 18.6 per cent in June.

He said: “MPC noted with concern the continued aggressive movement in inflation even after the rate hike in the last meeting and expressed its unrelenting resolve to restore price stability while providing the necessary support to strengthen our fragile economy.

“As regards the decision whether to tighten or hold, the committee was unanimous and so did not consider both loosening and retaining rates at existing levels at this meeting.