CBN Hikes Monetary Interest Rate To 14%

The Central Bank of Nigeria (CBN) has again hiked the monetary interest rate to 14 per cent from 13.5 per cent.

The apex bank Governor, Godwin Emefiele disclosed this on Tuesday, July 19 while addressing journalists shortly after the Monetary Policy Committee (MPC) meeting in Lagos, Naija News reports.

This is the second time CBN will announce interest raise this year. The Monetary Policy Committee (MPC) announced the first hike about three months ago.

The latest update showed that the committee increased the Monetary Interest Rate (MPR) by 150 basis points in May 2022 – from 11.5 per cent to 13 per cent.

The MPC announced a further tightening of the rates by 100 basis points – 14 per cent from 13 per cent in May.

Naija News understands that the apex bank had held the official interest rate at 11.5 per cent to pursue a place of price stability that is conducive to growth.

As regards the decision to tighten, loosen or hold, the MPC members were unanimous and so did not consider both loosening and retaining rates at existing levels.

The MPC believes that loosening will worsen the existing liquidity condition in the country and further dampen money market rates.

The MPC, however, retained other monetary parameters constant around the MPR. That implies that the apex bank retained held the asymmetric corridor of +100/-700 basis points was also retained, same for the Cash Reserve Ratio at 27.5 per cent, while the Liquidity Ratio was also kept at 30 per cent.

The bank also urged the federal government to curb insecurity to enable farming activities to return across the country and help to reduce the inflationary pressure from the supply side of the chain.

MPC called on the government to seek viable ways to address the pricing issue of petroleum products to deal with the issue of fuel scarcity.