CBN’s interest rate now 13%, first time in over five years

The policy-setting committee of the Central Bank of Nigeria (CBN) has raised the monetary policy rate (MPR), which measures interest rate, to 13 per cent to tame rising inflation.

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.
Speaking with newsmen on Tuesday after the committee’s meeting at the CBN headquarters in Abuja, Godwin Emefiele, governor of the apex bank, said six out of eleven committee members voted to raise the key rate.

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

Reports say this is the first time the committee will raise the country’s benchmark lending rate since July 2016. It is also the first time since March 2019 that the apex bank would be making a decision on the policy rate.

Emefiele 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.