CBN Hikes Benchmark Interest Rate to 14%
After a two-day meeting that started on Monday, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) voted to increase the Monetary Policy Rate (MPR) by 100 basis points to 14.0%.
The new interest rate adjustment follows the previous 150 basis points increased the monetary authority recorded in May 2022. In less than three months, Nigeria’s interest rate has been adjusted upward by 2.50% from 11.50%. READ: Central Bank of Nigeria Hikes Interest Rate to 13%
However, Godwin Emefiele, CBN Governor said a previous 150 basis points rate increase in May had not permeated enough in the economy to halt rising inflation, which came in at 18.6% in June, its highest level in more than five years.
Global central banks have continued to deploy interest rate hikes to fight rising inflation that follows distortion in the supply chain. CBN had maintained a dovish stance in the past but unsettled externalities, market dynamics appear to have influenced the spiral interest rate hikes.
Meanwhile, the Committee retains its cash reserve requirement (CRR) at 27.5%, liquidity ratio at 30.0% and asymmetric corridor around the monetary policy rate at +100/-700 basis points.
Emefiele said on Tuesday that all members of the 11-member monetary policy committee voted for rates to rise at the latest meeting, although they differed over the size of the increase.
Six MPC members, a majority, voted for a 100 basis point increase. CBN Governor said if inflation continued on an upward trajectory CBN will continue with its tightening policy.#CBN Hikes Benchmark Interest Rate to 14%
