CBN jacks up interest rate to 18 per cent

The Central Bank of Nigeria (CBN) has jacked up the interest rate from 17.5 per cent to 18 per cent.

The governor of the CBN, Godwin Emefiele, disclosed in Abuja on Tuesday while speaking on the outcome of the meeting of the Monetary Policy Committee.

The latest increase in monetary policy rate, it was learnt, was part of the aggressive measures to contain the nation’s rising inflation.

Last week, Nigeria’s inflation rate rose to 21.91 per cent amid the scarcity of cash.

The monetary policy rate (MPR) measures interest rate.

This is the second consecutive time the apex bank will be raising the benchmark rate this year.

Emefiele said the committee members voted to hike the rate by 50 basis points to 18 per cent, retain the asymmetric corridor at +100 and -700 basis points around the MPR, retain the cash reserve ratio (CRR) at 32.5 per cent and liquidity ratio at 30 per cent.

He said although inflation had remained on the increase, the previous tightening measure continued to reduce the rate of price increase.

The CBN governor said the apex bank’s stringent micro and macro-prudential guidelines had ensured the stability and sustenance of the banking system.

He cited factors such as the planned petrol subsidy removal as one of the reasons for the tightening stance of the monetary policy committee.

Emefiele said, “Whether we like it or not, subsidy will likely be removed before the end of this administration in May.

“To reduce the gap in negative real rates, we will continue to tighten but more moderately.”

The MPR is also the baseline interest rate in an economy, every other interest rate used within an economy is built on it.