Money

Why bank regulator raised interest rate in Nigeria

Published

2 months ago

March 22, 2023

Why bank regulator raised interest rate in Nigeria

The Monetary Policy Committee of the Central Bank of Nigeria (CBN) has decided to raise the benchmark interest rate by 0.5 per cent to 18 per cent.

At the end of the second MPC meeting of the year on Tuesday, the CBN Governor, Godwin Emefiele, disclosed that the slight increase was to mitigate the effect of inflation and other economic issues.

The CBN governor said, “The MPC committee voted to raise the MPR by 50 basis points to 18 per cent, retain asymmetric corridor at +100 and -500 basis points around the MPR. Members resolved by a majority vote to raise the monetary policy rate (MPR) by 50 basis points. In summary, 10 members voted to raise MPR by 50 basis points, one member voted to raise MPI by 25 basis points, and one member voted to hold the MPR.

“All members voted to keep all other parameters constant. The MPC voted to raise MPR to 18 per cent, retain a symmetric corridor plus 100 and minus 500 points around the MPR, retain the CRR at 32.5% and retained liquidity ratio at 30 per cent.”

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The MPR had been on a steady rise since April 2022, when it was 11.50 per cent.

The rate impacts lending and inflation rates, and, when jacked up, consequently affects increase in prices of goods and services in the country.