CEM REPORT, ECONOMY | The benchmark interest rate has been raised by 25 basis points to 18.75 per cent from its initial 18.5%, while the Monetary Policy Committee of the Central Bank of Nigeria voted to keep all other policies the same except the asymmetric corridor which was narrowed.
This is the first MPC meeting chaired by the new acting CBN governor, following the suspension of Godwin Emefiele. This is also the first MPC meeting under President Bola Tinubu’s administration.
The Acting CBN Governor, Folashodun Shonubi, disclosed the increase while reading the communiqué.
“In summary, the MPR voted to raise the policy rate by 25 basis points from 18.5 to 18.75 per cent.”
According to the MPC, the decision to further hike interest rates was driven by the rate of rising inflation in the country.
Highlights of the MPC decision
The MPR was increased by 25 basis points to 18.75%
The asymmetric corridor was narrowed to +100/-300 basis points around the MPR from +100/-700 basis points
CRR was retained at 32.5%
The liquidity Ratio was also kept at 30%
It is doubtful the increase will help abate inflation in the country. According to the National Bureau of Statistics (NBS) the nation annual inflation rate for June stands at 22.41 per cent. This is coupled with unpredictable price of fuel and the unification of the exchange windows.
However, President Bola Ahmed Tinubu had said interest rates needed to be reduced to increase investment and consumer purchasing in ways that sustain the economy at a higher level.
