CBN increases benchmark interest rate to 14%

For the second time this year, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) on Tuesday increased the official interest rate by 100 basis points (bpts), bringing the total increase to 250 bpts within three months.

Addressing the press after the meeting, CBN governor, Mr Godwin Emefiele said the committee will continue to increase the benchmark rate if inflation continues on its growth trajectory.

The committee increased the Monetary Interest Rate (MPR) by 150 basis point in May 2022 – from 11.5 per cent to 13 per cent.

At the end of its July meeting, the MPC again announced further tightening of the rates by 100 basis points – to 14 percent from 13 per cent in May.

The apex bank had held the official interest rate at 11.5 per cent to pursue a place of price stability that is conducive to growth.

The MPC believes that loosening will worsen the existing liquidity condition in the country and further dampen money market rates.

However, the MPC left other monetary parameters constant around the MPR. That implies that the apex bank held the asymmetric corridor of +100/-700 basis points was also retained, same for the Cash Reserve Ratio at 27.5 per cent, while Liquidity Ratio was also kept at 30 per cent.

The bank also urged the federal government to curb insecurity to enable farming activities to return across the country and help to reduce the inflationary pressure from the supply side of the chain.

MPC called on the government to seek viable ways to address the pricing issue of petroleum products to deal with the issue of fuel scarcity.

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CBN increases benchmark interest rate…  CBN increases benchmark interest rate…