The Central Bank of Nigeria (CBN) has raised the benchmark interest rate, the Monetary Policy Rate (MPR), to 14%.
The apex bank raised the anchor rate on Tuesday, following the conclusion of its two-day Monetary Policy Committee (MPC) meeting in Abuja.
The CBN Governor, Mr Godwin Emefiele, who announced the rate increase while speaking to reporters, indicated that the step was made to combat the country’s rising inflation.
Over the weekend, the National Bureau of Statistics (NBS) reported that Nigeria’s inflation rate increased by 18.60% in June 2022 and that members of the MPC should consider raising interest rates to contain inflation, which has risen to its highest level in five years.
For the same reason, the MPC hiked the country’s basic interest rate to 13% from 11.5 percent at its most recent meeting two months ago.
The team left every other policy rate constant, with the asymmetric corridor continuing at +100 and -700 basis points around the MPR, the Cash Reserve Ratio at 27%, and the liquidity ratio at 30%.
Because the MPR is the main rate against which other interest rates are calculated, no commercial bank would be allowed to lend money to consumers at 14% because that is the rate at which they borrow from the central bank.
The Nigerian economy has recently been put under strain as a result of increased food and fuel prices caused by Russia’s invasion of Ukraine, as well as a lack of foreign cash (forex).
Despite these challenges, the federal government feels it has handled the country’s economy quite successfully with the help of the central bank. Some individuals, however, disagree, accusing the government of wrecking the economy.