CBN raises interest rate to 13%

25 May CBN raises interest rate to 13%

The Central Bank of Nigeria on Tuesday raised the interest rate from 11.5 per cent to 13 per cent, the first increase in about five years.

However, it retained the asymmetric corridor around the MPR at +100 /-700 basis points, Cash Reserve Ratio at 27.4 per cent, and Liquidity Ratio at 30 percent.

The CBN Governor, Godwin Emefiele, announced this on Tuesday while addressing the reporters after the Monetary Policy Committee meeting in Abuja.

Justifying the raise, Emefiele said the committee took the decision to curtail what he called aggressive rise in inflation rate which he said would affect growth.

He expressed concern that the impact of the CBN development finance initiatives was being threatened by an astronomic rise in inflation rate and explained that the MPC was faced with the dilemma of managing two parallel trends at the same time.

He said that rising money demand was on the increase and that the trend is likely to continue till the end of the 2023 elections.

“The dilemma confronting the MPC at this rate was how best to drive down domestic prices amid rising inflation while at the same time continue to support the fragile recovery of the Nigerian economy,” he said.

He said the MPC urged the Bank to sustain its development finance initiatives which provide long-term loans at low and single-digit interests.

He said that the MPC noted that the war between Russia and Ukraine has resulted in significant disruption to the global supply chain which will be contributing to the general inflationary trend across the globe.

“Six members voted to raise the MPR by 150 basis points, four members’ by 100 basis points and one member, by 50 basis points.