The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has voted unanimously to raise the Monetary Policy Rate (MPR) to 14 per cent.
CBN Governor Godwin Emefiele announced this on Tuesday during the 286th meeting of the Monetary Policy Committee held in Lagos.
The MPR is the baseline interest rate in an economy while every other interest rate used within such an economy is built on it.
The CBN had in May 2022, increased the MPR to 13%, a development that came after two and a half years.
According to Emefiele, the rising inflation which jumped to five year high and also low purchasing power of Nigerians were key in the committee’s decision.
The hike in interest rate, the CBN Governor said would help tame rising inflation.
“The committee resolved that the most rational policy option would be to further strengthen its tightening stance in order to effectively curtail the unabated rising trend of inflation.
“Members were conscious of the fact that output growth remained fragile. However, not curtailing inflation now could erode the monetary gains achieved in improving consumer purchasing power and thus worsen the poverty level for the vulnerable populace”, Emefiele said.
Emefiele explained that the committee also voted to retain the asymmetric corridor at +100 and -700 basis points around the MPR, as well as Cash Reserved Ratio (CRR) at 27.5 per cent.
Also, Liquidity Ratio was also kept at 30%
He added, “Committee thus vote unanimously to raise the Monetary Policy Rate (MPR).
“One member voted to increase the MPR by 150 basis points, six members by 100 basis points, one member by 75 basis points and three members by 50 basis points.
“Consequently, Committee resolved to increase the MPR by 100 basis points from 13 percent to 14 percent. In summary, MPC voted as follows:
“Increase MPR to 14% from 13, retain the Asymmetric Corridor at +100 and -700 basis points around the MPR, retain the CRR at 27.5 percent and retain liquidity ratio at 30 percent.”
He advised the various banks in the country and the Federal Government to redouble efforts in supporting monetary authority.