The Central Bank of Nigeria’s Monetary Policy Committee has raised the benchmark interest rate from 15.5 to 16.5 per cent.
VANTAGE NEWS reports that the CBN said the interest rate was raised in order to rein in inflation and maintain economic stability.
The CBN Governor, Godwin Emefiele, who made this known while speaking at the end of a two-day Monetary Policy Committee meeting on Tuesday in Abuja, said the committee voted to raise the rate to 16.5 per cent while retaining the asymmetric corridor of +100/-700 basis points around the benchmark interest rate, also known as the monetary policy rate.
Emefiele added that the MPC also voted to retain the cash reserve ratio at 32.5 per cent and the liquidity ratio at 30 per cent.
He said, “The Committee’s choices were on whether to further hike rates or pause for the impact of the last three rate hikes to continue to feed through the economy. At this MPC, therefore, the options considered were primarily to hold or further tighten the policy rate. The option to loosen was not considered as this would gravely undermine the gains of the last three rate hikes.”
VANTAGE NEWS reports that the latest increase is the fourth time the committee would be raising the benchmark interest rate since May when the rate was moved upwards from 11.5 to 13 per cent.
The rate has since increased to 14 per cent in July, 15.5 per cent in September, and now to 16.5 per cent in November.
“At this meeting, the MPC was concerned that the global inflationary pressures have continued to trend higher and financial markets were also facing challenges. It observed that this was indeed the trend in Nigeria, with inflation attaining 21.09 per cent in October 2022,” Emefiele added.
The cost of production, demand and external factors have been largely responsible for inflation which rose from 15.62 per cent in March to 21.09 per cent in October.
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