CBN raises Monetary Policy rate to 13%
By Ibidunni Banjoko
The Central Bank of Nigeria has raised the Monetary Policy Rate to 13% from 11.5%. It is the first change since September 2020.
This was disclosed by Godwin Emefiele, the Governor of the Central Bank while reading the communiqué of the MPC’s 142nd meeting. He explained that the decision to increase the benchmark interest rate was taken at the Monetary Policy Committee (MPC) meeting.
While addressing financial reporters recently, Mr. Emefiele said members of the committee were unanimous with the decision to hike the rates as it was the best thing to do after holding them for about two years.
The move surprised analysts and traders who expected the Monetary Policy Committee (MPC) to keep the rate on hold.
But the Governor told a news briefing that the rate hike was necessary to tame inflation, which quickened to 16.82% in April, its highest in eight months, amid a fragile economic recovery.
Six members of the MPC voted to increase the main lending rate by 150 basis points, four of them by 100 basis points and one by 50 basis points.
It was the biggest rate hike since July 2016 when the central bank increased rates by 200 basis points.
“(MPC members) felt that tightening will help rein in inflation before it assumes a galloping trend,” Emefiele said.
“The committee decided to raise the monetary policy rate for the first time in two and a half years to rein in the current rise in inflation as members were of the view that the continued uptrend may adversely impact growth.”
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