The Central Bank of Nigeria has raised its Monetary Policy Rate by 100 basis points to 16.5%.
This is an increase from 15.5% since May 2022. The MPR follows a continued rise in the inflation rate which hit 21.09% in October.
Governor of the Central Bank of Nigeria Godwin Emefiele, who made this known at the end of the Monetary Policy Committee, said previous increases were beginning to yield results and there was a need to keep tightening. It tightened by 100 basis points.
Emefiele announced that the committee also retained the Cash Reserve Ratio (CRR) at 32.5 per cent, and voted to retain the asymmetric corridor at +100 and -700 basis points around the MPR. The liquidity ratio was retained at 30 per cent.
The rising prices of goods and services had pushed triggered the inflation rate to 21.09 per cent in October 2022, in a nine consecutive month rise from 15.6 per cent in January, prompting the CBN to raise the MPR by 500 basis points within four consecutive MPC meetings from 11.5 per cent in April 2022.
Explaining the rationale for the further hike in the MPR, Emefiele said that the persistent rise in inflation is hurting economic growth and the driving factors are still existing.
He stated: “We believe that at 21.9 percent inflation is already hurting economic growth. If we did not see this high level of inflation in the last seven months we would have been damned optimistic that growth would have hit close to 4.0 percent.
“But because of the aggressive rate of rise in inflation, it is hurting economic growth at this level in Nigeria and that is the reason you would see that we are taking this very seriously because whether you would even try to either loosen or hold rates low what you would find is that inflation rate at this kind of levels of above from 14 to 15 percent into 21 percent, economic growth would either decelerate or at best will be very very weak, would not be at a moderated level.”