CEM REPORT | The Monetary Policy Committee of the Central Bank of Nigeria has again raised Interest rate to a 20-year high of 15.5% from 14% at their September meeting which ended Tuesday 27th September 2022,
Governor of the CBN, Godwin Emefiele disclosed this in Abuja while delivering the communique at the end of the September MPC meeting.
No doubt, Central Bank is faced with tough task of fighting the ruthlessly rising inflation, and economic watchers expected a further raise of rates since there seems to be no other option to it. Emefiele actually noted that the committee did not consider the option of reducing or holding rates, but rather how much an increase should be made.
According to Emefiele, the committee unanimously voted to raise rate. 10 members voted to raise the MPR by 150 basis points, 1 voted for 100 basis points increase, while 1 voted for 50 basis points increase.
Central Bank has consistently increased the interest rate 4 four times from 11.5% to 13% in May now to 15.5% in September in a bid to combat the rising cost of goods and services that have remained unabated having rising above 20% in the last months.
The further increase in interest rate to a record high of 15.5% will cause liquidity in the financial sector since cost of credit is expected to rise with its lowering impact on the gross domestic product. Yield of government fixed securities will rise as well.
Highlights of the committee’s decision
- MPR raised by 150 basis points from 14% to 15.5%.
- The asymmetric corridor of +100/-700 basis points around the MPR was retained.
- CRR was raised to a minimum of 32.5%.
- The liquidity Ratio was also kept at 30%
- Highlights of the committee’s decision