Central Bank of Nigeria Hikes Interest Rate on Savings Deposits
The Central Bank of Nigeria (CBN) has raised the interest rate on savings to 4.2 per cent. The upward review of interest on savings was stated in a circular signed by the CBN director, Banking Supervision, Haruna Mustafa, and issued to all banks dated August 15, 2022.
As result, the bank of last resort expected deposit money banks in the country to increase their interest rate on savings from 10 per cent of MPR to 30 per cent of MPR with effect from August 1, 2022.
Consequently, bank customers can now earn up to 4.2 per cent which is 30 per cent of the 14 per cent MPR as against 1.4 per cent which was 10 per cent of the MPR.
“It will be recalled that as part of the efforts to ameliorate the impact of the COVID-19 pandemic, the Central Bank of Nigeria reduced the minimum interest rates payable on local currency savings deposits from 30 per cent to 10 per cent of the Monetary Policy Rate (MPR).
“This was aimed at stimulating growth in the larger economy following the economic slowdown occasioned by the pandemic,” the circular reads. READ: Central Bank of Nigeria Hikes Interest Rate to 13%
“However, following the return to full normalcy and considering the prevailing macroeconomic conditions, it has become necessary to effect an upward adjustment of the interest rate payable on local currency savings deposits.
“Accordingly, effective August 1, 2022, the negotiable minimum interest rate on local currency savings deposits shall be 30 per cent of MPR. This supersedes our letter dated September 1, 2020, referenced BSD/DIR/GEN/LAB/13/052 on the subject.”
At its last meeting in July, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria had raised Monetary Policy Rate (MPR) to 14 per cent due to the persistent rise in inflation rate in the country.
In September 2020, the central bank, as part of efforts to mitigate the impact of the COVID-19 pandemic, had slashed the minimum interest rate payable on Naira savings deposits from 30 per cent of MPR to 10 per cent of MPR.
The bank had explained that the move was aimed at stimulating growth in the larger economy following the economic slowdown caused by the pandemic. #Central Bank of Nigeria Hikes Interest Rate on Savings Deposits
