CBN Increases Benchmark Interest Rate To 14%

The Central Bank of Nigeria’s (CBN) Monetary Policy Committee on Tuesday voted to increase the Monetary Policy Rate (MPR) or benchmark interest rate to 14 per cent from 13 per cent in its sustained efforts to tame the rising inflation rate in the county.
The Governor of the CBN, Godwin Emefiele, made this known on Tuesday while addressing journalists at the end of the committee’s two day meeting at the CBN headquarters in Abuja.
Emefiele who expressed optimism that the benchmark interest rate hike would help in addressing Nigeria’s rising inflation, said the committee members voted to hike the rate by 100 basis points and retain the asymmetric corridor at +100 and -700 basis points around the MPR and liquidity ratio at 30 percent.
The Tuesday increase of the benchmark interest rate by the committee was the second time this year. The MPC at its last meeting in May 2022 had increased the interest rate from 11.5 percent to 13 per cent.
The MPC considered the continued aggressive movement in inflation even after the rate hike at its last meeting.
Emefiele disclosed that members agreed not to consider both loosening and retaining rates at the existing levels.
The CBN chief said members felt that loosening will trigger the weakening of the exchange rate which could pass through to domestic prices.
“MPC did not also consider holding rates constant because a hold stance will suggest that the bank is not responding sufficiently to both the global and domestic price developments as inflation numbers continue to trend aggressively upward”, he added.
The body expressed an unrelenting resolve to restore prices stability and provide the necessary support to strengthen our fragile economy.
But then, despite the monetary policy measures to curb the rising general price level in the economy, the inflation rate has continued to surge over the months.
For instance, the National Bureau of Statistics (NBS), had last Friday reported that Nigeria’s inflation rate increased to over 5-year high of 18.6 per cent in June 2022, from 17.71 per cent recorded in the previous month,
The Bureau attributed the surge largely to the surge in energy prices and transportation costs.