The Central Bank of Nigeria (CBN) has raised the Monetary Policy Rate (MPR) from 13 per cent to 14 per cent.
CBN Governor Godwin Emefiele announced this on Tuesday during the 286th meeting of the Monetary Policy Committee (MPC) meeting held in Lagos.
According to him, it was the right option considering economic realities.
“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,” Emefiele said.
“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.”
The primary interest rate of a nation or economy, upon which all other interest rates in that economy are based, is known as the monetary policy rate (MPR).
The apex bank raised the MPR rate but kept the other factors the same.
The Cash Reserved Ratio (CRR) is at 27%, and the asymmetric corridor is still +100 and -700 basis points around the MPR.
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 per cent to 14 per cent. 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.”
Tuesday’s rate hike marks the second time, the MPC will raise the interest rate in two months.