The benchmark interest rate (also known as the “monetary policy rate”) has been increased by the Monetary Policy Committee of the Central Bank of Nigeria from 13 to 14 percent.
This is the second hawkish move by the central bank in 2022 in response to the inflationary trend.
According to the National Bureau of Statistics (NBS), Nigeria’s inflation rate hit an over 5-year high of 18.6% in June 2022, from 17.71% recorded in the previous month, largely due to the surge in energy prices and transportation costs
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.
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Addressing journalists on Tuesday after the committee’s meeting at the CBN headquarters in Abuja, Godwin Emefiele, governor of the apex bank, said the hike in interest rate would help tame rising inflation.
The development is the second consecutive time the apex bank will be raising the benchmark rate this year.
At its last meeting in May, the committee also raised MPR from 11.5 percent to 13 per cent over the surge in fuel and food costs.
Emefiele said the committee members voted to hike the rate by 100 basis points and retained the asymmetric corridor at +100 and -700 basis points around the MPR and liquidity ratio at 30 percent.
During its third quarterly media briefing in 2022 on the state of the Nigerian economy, the Lagos Chamber of Commerce and Industry (LCCI) advised CBN to roll out more friendly supply-side policies to boost productive sectors.
The chamber said the rate hike alone would not curb inflationary pressures.
It emphasised the need for the apex bank to pay attention to boosting supply and cushioning rising production costs caused by the high cost of energy and raw materials.