The Central Bank of Nigeria (CBN) has raised the Monetary Policy Rate (MPR) from 13 percent to 14 percent.
This was made known by CBN Governor Godwin Emefiele on Tuesday during the 286th meeting of the Monetary Policy Committee held in Lagos. He noted that it was the right option considering economic realities.
“The committee resolved that the most rational policy option would be to strengthen its tightening stance further to curtail the unabated rising trend of inflation effectively,” Emefiele said.
“Members were conscious of the fact that output growth remained fragile. However, not curtailing inflation now could erode the monetary gains achieved in improving consumer purchasing power and thus worsen the poverty level for the vulnerable populace.”
The principal interest rate on which all other interest rates in a nation or economy are based is the monetary policy rate (MPR).
Although the apex bank raised the MPR rate, it kept the other specifications.
The MPR continues to be surrounded by an asymmetrical corridor of +100 and -700 basis points, with a Cash Reserved Ratio (CRR) of 27%.
He added, “Committee thus vote unanimously to raise the Monetary Policy Rate (MPR). One member voted to increase the MPR by 150 basis points, six members by 100 basis points, one member by 75 basis points and three members by 50 basis points.
“Consequently, Committee resolved to increase the MPR by 100 basis points from 13 per cent to 14 per cent. In summary, MPC voted as follows:
“Increase MPR to 14% from 13, retain the Asymmetric Corridor at +100 and -700 basis points around the MPR, retain the CRR at 27.5 per cent and retain liquidity ratio at 30 per cent.”
With the rate increase on Tuesday, the MPC will have increased interest rates twice in the past two months. On May 24, the MPC raised the rate from 11.5 to 13 per cent.