CBN Raises Interest Rate To 17.5%

The Central Bank of Nigeria’s (CBN) monetary policy committee has raised its benchmark interest rate, otherwise called the monetary policy rate, to 17.5% from 16.5% in January.

CBN’s governor, Godwin Emefiele, made this announcement at a press conference that followed the conclusion of the monetary policy committee meeting on January 24, 2023.

This is the first interest rate hike in 2023 and it suggests that the apex bank is continuing with the hawkish rate policy started in 2022. Recall that the CBN had raised interest rates by a cumulative 500 basis points last year in a bid to tame the rising inflation rate in the country.

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The decision to further tighten the monetary policy rate was made despite the moderation of the headline inflation rate in December 2022 to 21.34% from 21.47% recorded in the previous month.

According to the CBN governor, a marginal decline in the inflation numbers printed in December is not enough to begin to celebrate, which influenced the decision in favour of raising as opposed to a hold or loosening decision.

The CBN has also maintained that it would not be extending the deadline for the extinction of the old naira notes from 31st January 2023. Highlighting that the 100i-day window is more than enough to deposit all old naira notes in circulation to the banks.