Tayo Busayo, Abuja – The Central Bank of Nigeria (CBN) has raised the Monetary Policy Rate (MPR), also known as the interest rate, from 14% to 15.5%, as a way of tackling inflation.
This was disclosed on Tuesday, by the Governor of the CBN, Godwin Emefiele, while reading the communiqué of a two-day meeting of the Monetary Policy Committee (MPC) held in Abuja.
Emefiele said the Committee also raised the cash reserve ratio (CRR) to 32.5 percent from 27.5 percent.
The CRR is the share of a bank’s total customer deposit that must be kept with the central bank in the form of liquid cash.
This was in consideration of the persistent rise in inflation rate and fragile growth. Nigeria’s headline inflation accelerated to the highest level in 17 years at 20.52 percent in August 2022, from 19.64 percent in the previous month.
The CBN had in the last few months increased the MPR by a combined 250 basis points to rein in inflation. In its meeting in May 2022, the CBN raised its benchmark interest rate by 150 basis points to 13 percent, the first time in six years. It raised it further in July by 100 basis points to 14 percent.
After the meeting, MPC members unanimously voted to retain other parameters. Consequently, the CBN retained the Asymmetric Corridor of +100/-700 basis points around the MPR: and the Liquidity Ratio at 30 percent.
“The MPC noted with concern the continued aggressive movement in inflation, even after the rate hike at its meeting in May and July 2022, and expressed its unrelenting resolve to restore price stability, while providing the necessary support to strengthen the fragile recovery”, Emefiele said.