The Central Bank of Nigeria’s (CBN) monetary policy committee reached an agreement to increase its benchmark interest rate by another 100 basis points during a two-day meeting that ended today, as the fight against inflation becomes more difficult.
In an effort to combat the deteriorating consumer price index, the monetary policy rate (MPR) was raised from 15.5% to 16.5% in accordance with Broadstreet analysts’ consensus and the International Monetary Fund’s (IMF) anticipation.
The Committee considered domestic and international developments during its final meeting of 2022, paying special attention to the situation in Ukraine and the gradual normalization of monetary policy in advanced countries.
A zero-COVID policy in China, growing energy costs globally, supply chain congestion, a world food crisis, central bankers’ hawkish stance on inflation, and a dramatic rise in interest rates throughout the globe are just a few of the challenges mentioned.
Along with the prognosis and potential risks for the remainder of the year, it also examined the local and international financial environments. In 2022, the monetary policy rate will be increased to 16.5% for the fourth time in a row. Eleven committee members were present.
The committee keeps an asymmetrical corridor surrounding the MPR at +100/-700 basis points. Additionally, it keeps the Liquidity Ratio (LR) at 30.0% and the Cash Reserve Ratio (CRR) at 32.5% as-is. READ: IMF Identifies CBN Cracks in Fight Against Inflation.
MarketForces Africa reported that the CBN raised the MPR by a total of 500 basis points in 2022. At its meeting in May 2022, the CBN increased its benchmark interest rate by 150 basis points, to 13.00%, for the first time in six years.
Also, the CBN committee then increased by another 100 basis points in July to bring it to 14.00%, and by another 100 basis points in August 2022 to send it to 15.50%. #CBN Hikes Interest Rate to 16.5%.