FILE PHOTO: Central Bank of Nigeria's logo is seen on the headquarters building in Abuja, Nigeria January 22, 2018. REUTERS/Afolabi Sotunde/File Photo - RC1E81C7FA80
CBN raises interest rate from 11.5% to 13%
The Central Bank of Nigeria’s(CBN) Monetary Policy Committee has voted jacked up benchmark interest to 13 per cent, 150 basis points above the previous rate to tame rising inflation.
It is the first change since September 2020 and the fist hike in six years.
The monetary policy rate (MPR) is the baseline interest rate in an economy, every other interest rate used within an economy is built on it.
Addressing journalists on Tuesday after the committee’s meeting at the CBN headquarters in Abuja, Godwin Emefiele, governor of the apex bank, said six out of eleven committee members voted to raise the key rate.
Emefiele said the committee also voted to retain the asymmetric corridor at +100 and -700 basis points around the MPR and liquidity ratio at 30 per cent.
Checks by TheCable showed that this is the first time the committee will raise the country’s benchmark lending rate since July 2016. It is also the first time since March 2019 that the apex bank would be making a decision on the policy rate.
Emefiele said the global outlook remains clouded with uncertainties over the Russia-Ukraine war and the COVID-19 pandemic.
“The sharp rise in inflation across the world as generated growing concerns among central bankers driven by rising demands and wage bills… consequently, US Fed, England and Canada have provided shift away from their policy stance,” he said.
“To reduce inflationary pressure, CBN decided to take a shift on historical stance on monetary policy rate.”
The CBN governor urged banks and the federal government to redouble efforts in supporting monetary authority.
