Inflation: CBN raises interest rate to 15.5%

The Central Bank of Nigeria (CBN) has raised the Monetary Policy Rate (MPR) to 15.5 percent, from 14 percent in a bid to curb inflation in the country.

Speaking after the meeting of the 5th Monetary Policy Committee in Abuja, on Monday, September 27, Governor of CBN, Mr. Godwin Emefiele, announced an increase in the Cash Reserve Ratio (CRR) to a minimum of 32.5% from the July CRR of 22.5 percent, while retaining Liquidity Ratio at 30%.

“The committee voted unanimously to raise the MPR…The MPC voted to raise the MPR to 15.5, retain the asymmetric corridor at +100 -700 basis points around the MPR. Increase the Cash Reserve Ratio (CRR) to a minimum of 32.5% and retain liquidity ratio at 30%.

Members deliberated the impact of the widening margin between the current policy rate of 14 percent and the inflation rate of 20.52 percent.

At this meeting, the option of reducing the policy rate was not considered as this would be gravely detrimental to reigning in inflation. The committee thus agreed unanimously to raise the policy rate to narrow the interest rate gap and rein in inflation. The committee thus voted unanimously to raise the MPR.

10 members voted to raise the MPR by 150 basis points, one (voted to raise it) by 100 basis points and one by 50 basis points. 10 members voted to increase CRR (Cash Reserve Ratio) by 500 basis points, while two members voted to increase it by 750 basis points.

The MPC noted with concern the continued aggressive movement in inflation, even after the rate hike at its meeting in May and July 2022, and expressed its unrelenting resolve to restore price stability, while providing the necessary support to strengthen the fragile recovery.”