The policy-setting committee of the Central Bank of Nigeria (CBN), the Monetary Policy Committee has raised its Monetary Policy Rate, (MPR), also known as interest rate, from 14 percent to 15.5 percent, to tame rising inflation.
The CBN Governor, Godwin Emefiele, made the announcement yesterday, during a media briefing at the apex bank’s headquarters in Abuja, after the Committee’s meeting. He said 10 members of the committee voted for the rate hike.
The monetary policy rate is the baseline interest rate in an economy, whereby every other interest rate used within an economy is built on it.
Recall that in July, the interest rate was raised from 13 percent to 14 percent. However with the inflation rate still spiking above 20%, the CBN has raised the rate further to 15.5% in a bid to combat the rising cost of goods and services.
The last time the apex bank maintained an interest rate higher than 15% was in 2002, bringing the current rate of 15.5% to a 20-year high.
Giving an explanation earlier, the apex bank’s governor said, “Members deliberated the impact of the widening margin between the current policy rate of 14 percent and the inflation rate of 20.52 percent.
“10 members voted to raise the MPR by 150 basis points; one member (voted to raise it) by 100 basis points, and one member 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”.
In August, Nigeria’s inflation rate rose to a nearly two-decade high, at 20.52 percent.
