CBN Raises Benchmark Interest Rate To 17.5%
The Monetary Policy Committee of the Central Bank of Nigeria (CBN) ended its first meeting this year on Tuesday by raising the Monetary Policy Rate (MPR), also known as the benchmark interest rate, to 17.5 per cent from 16.5 per cent.
The CBN Governor, Mr. Godwin Emefiele, gave this hint while briefing the media on the key decisions taken at the meeting.
According to the him, the marginal decline in inflation rate to 21.34 per cent in December from 21.47 per cent recorded in the previous month though reflects that efforts to tame inflation in the country are yielding results, the moderation, however, is not enough to reduce the benchmark interest rate, hence the decision of the Committee’s members to raise the MPR.
Emefiele explained that specifically, the committee voted in favour of jacking up the MPR by 100 basis points and retained the asymmetric corridor of +100/-700 basis points around the MPR; CRR at 32.5 per cent; even as the Liquidity Ratio was retained at 30 per cent.
With the hike by 100 basis points hike in the interest rate, the apex bank has demonstrated its commitment to sustaining the hawkish monetary policy measures this year as part of its efforts to achieve financial system stability with the attendant positive implications for the nation’s economy.
Available data on the MPC decisions over the years, showed that latest hike in the MPR pushed the benchmark interest rate to the highest in over 21 years, since 2001 when it averaged 20.5 per cent and the fifth consecutive increment in the rate.
It would be recalled that the committee had raised interest rates by a cumulative 500 basis points last year in its drive to tame the surging inflation rate in the country.