In an aggressive move to combat inflation, the Central Bank of Nigeria (CBN) increased the Monetary Policy Rate (MPR) to 15.5 percent from 14 percent.
Mr. Godwin Emefiele, Governor of the Central Bank of Nigeria, made the announcement yesterday during a press conference following the conclusion of the 5th Monetary Policy Committee meeting in 2022 in Abuja. He announced an increase in the Cash Reserve Ratio (CRR) to a minimum of 32.5% from 22.5 percent in July, while keeping the Liquidity Ratio at 30%.”
Mr. Emefiele stated, “The committee unanimously voted to raise the MPR…The MPC voted to increase the MPR to 15.5, while maintaining the asymmetric corridor at +100 -700 basis points around the MPR.
On why the rate was raised, he said, “Members deliberated the impact of the widening margin between the current policy rate of 14 percent and the inflation rate of 20.52 percent.
“At this meeting, the option of reducing the policy rate was not considered as this would be gravely detrimental to reigning in inflation. The committee thus agreed unanimously to raise the policy rate to narrow the interest rate gap and rein in inflation. The committee thus voted unanimously to raise the MPR.
The governor provided additional justification for the rate increase, stating that the MPC “noted with concern the sustained aggressive progression in inflation, even after the rate hike at its meetings in May and July 2022” and “expressed its unwavering resolve to restore price stability, while providing the necessary support to strengthen the fragile recovery.”
