The Policy Committee of the Central Bank of Nigeria (CBN) raised the monetary policy rate (MPR), a measure of interest rates, from 17.5% to 18%.
Last week, Nigeria’s inflation rate hit 21.91% amid continued cash shortages.
The monetary policy rate (MPR) is the base rate in an economy, all other interest rates used in an economy are based on it.
Godwin Emefiele, Governor of the apex bank, announced the development to reporters on Tuesday following a committee meeting at CBN headquarters in Abuja.
This is the second time in a row that the apex bank has raised its benchmark interest rate this year. Emefiele said committee members voted to increase the rate by 50 basis points to 18%, keep the asymmetric corridor at +100 and -700 basis points around the MPR, and keep the cash reserve ratio ( CRR) at 32.5% and liquidity ratio at 30. percent.
He said that although inflation still tends to increase, previous tightening measures have continued to slow down the rate of the price increase.
Responding to concerns about the effect of a hawkish stance on the banking sector, the CBN governor said the apex bank’s strict macro- and micro-prudential principles have ensured stability and sustainability. of the banking system.
He cited factors such as the planned removal of gasoline subsidies as one of the reasons the monetary policy committee tightened its stance.
“Whether we like it or not, subsidy removal will likely be removed before the end of this administration in May,” Emefiele said.
“To reduce the gap in negative real rates we will continue to tighten but more moderately.”
