CBN Raises Benchmark Interest Rate To 17.5%
Vondigest reports that the Central Bank of Nigeria (CBN) has raised its benchmark interest rate to 17.5 per cent in an aggressive push to contain the nation’s inflationary pressure.
This online platform gathered that the CBN Governor, Godwin Emefiele announced this after the apex bank’s Monetary Policy Committee (MPC) meeting in Abuja on Tuesday.
The MPC raised the monetary policy rate by 100 basis point to 17.5% and kept the asymmetric corridor at +100/-700 basis points around the MPR.
The MPC retained Cash Reserve Ratio (CRR) by 32.5% while liquidity ratio is kept at 30%.
Addressing journalists at the end of the two-day meeting in Abuja, Mr Emefiele said the committee voted to keep the asymmetric corridor at +100 and -700 basis points around the MPR.
He also disclosed that the MPC voted to keep the Cash Reserve Ratio (CRR) at 32.5 per cent, as well as the Liquidity Ratio at 30 per cent.
The CRR is the share of a bank’s total customer deposit that must be kept with the central bank in form of liquid cash, while the bank’s liquidity ratio is the proportion of deposits and other assets they must maintain to be able to meet short-term obligations.
In November, the MPC raised its benchmark lending rate to 16.5 per cent in a sustained push to control inflation and ease pressure on the naira.
In December, the nation’s statistics bureau said Nigeria’s s inflation figure dipped to 21.34 per cent from 21.47 per cent in November after 10 straight monthly increases. In the same month, the statistics bureau said food inflation which is one of the driving forces of Headline Inflation dropped to 23.75 per cent from 24.13 per cent a month earlier.
The committee deliberated on either to hike rates further or hold to examine the impact of the last four rate increases, Mr Emefiele said, adding that the options considered were primarily to hold the rate or tighten further to consolidate the previous gains.
However, the MPC noted that loosening the rate will gravely undermine the gains of the last four increases, hence the hike in rate.
Equally, on Tuesday, Mr Emefiele announced that the committee welcomed the recent deceleration in the nation’s inflation rates, noting that the persistence in the policy rate increase over the last few meetings of the committee has started to yield the expected decline in inflation.
The CBN also said its January 31, 2023 deadline for the validity of the old N200, N500 and N1,000 notes remains.
This online platform recalls that the CBN on October 26, 2022 had announced its plan to redesign the three banknotes. President Muhammadu Buhari subsequently unveiled the redesigned N200, N500 and N1,000 notes on November 23, 2022, while the apex bank fixed January 31 deadline for the validity of the old notes.