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CBN raises monetary policy rate to 13%

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Central Bank of Nigeria on Tuesday raised the the Monetary Policy Rate, which measures interest rate, to 13 per cent

By Emma Ogbuehi

In a bid to tame rising inflation, particularly on the eve of a consequential election year, the Central Bank of Nigeria (CBN) on Tuesday raised the the Monetary Policy Rate (MPR), which measures interest rate, to 13 per cent.

The CBN Governor, Godwin Emefiele,  disclosed this at the end of  MPC meeting in Abuja, this afternoon. 

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The CBN policy-setting committee voted to raise the rate, the first time in over two years.

The monetary policy rate (MPR) is the baseline interest rate in an economy, every other interest rate used within an economy is built on it.

The Monetary Policy Rate which had been at 11.5% since September 2020, in a bid to spur recovery from the recession recorded due to the covid-19 has now been raised by the apex bank after inflation rate rose above 16%.

Addressing journalists after the committee’s meeting at the CBN headquarters in Abuja, Emefiele said six out of 11 committee members voted to raise the key rate.

Read Also: GDP grows 3.11%, stretching 6 straight quarters

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The CBN Governor said the global outlook remains clouded with uncertainties over the Russia-Ukraine war and the COVID-19 pandemic.

“The sharp rise in inflation across the world as generated growing concerns among central bankers driven by rising demands and wage bills… consequently, US Fed, England and Canada have provided shift away from their policy stance,” he said.

“To reduce inflationary pressure, CBN decided to take a shift on historical stance on monetary policy rate.”

The CBN governor urged banks and the federal government to redouble efforts in supporting monetary authority.

Emefiele said the committee also voted to retain the asymmetric corridor at +100 and -700 basis points around the Monetary Policy Rate and liquidity ratio at 30 per cent.

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