The Central Bank of Nigeria, CBN, Monetary Policy Committee, MPC, in an attempt to arrest the plague of inflation has jacked up the interest rate from former14% to 15.5% in the country. Expert says the value represents a 150-basis point increase from the former 14 percent rate endorsed during the last monetary Policy Committee, MPC, meeting held in July 2022. At the end of the meeting today, the CBN Governor, Godwin Emifele informed newsmen that ten members have voted in favor of the rate hike and that necessitated the move.
Nigerian inflation overtook the 20% benchmark in August, fuelling speculations that the apex bank will be left with no option but to raise the bar.
The cash reserve ratio, which translates that the share of banks' total customer deposit in the custody of the apex bank as cash was also jacked to 32.5% from 27.5% while retaining the liquidity.
Explaining, the CBN boss informed the journalist, “Our research study at Central Bank has shown us that once inflation trends above 13 percent, it will retard growth. We have seen inflation in the last four months move so aggressively in Nigeria.
“It is difficult for us, for this MPC with all the data available, with all the research that has been conducted; it is difficult for us not to go in a very aggressive way we decided to go today.”
He further stated that “What we have done at this meeting is to say we will move CRR up by five percent to a minimum of 32.5 percent; that we will move MPR up by 150 basis points. That means over the last four months, we moved MPR up by over 400 basis points.
“But at the same time, let us not forget that inflation rate in Nigeria at 20.5 percent is still higher than our policy rate which means we are still in the realm of negative interest rate which remains injurious to the economy” Emifele added.