The Financial Coverage Committee (MPC) of the Central Financial institution of Nigeria (CBN) has raised the benchmark rate of interest to 14 per cent from 13 per cent.
The brand new improvement makes it the second consecutive time the apex financial institution would elevate the benchmark fee in 2022.
The CBN Governor, Godwin Emefiele, made this recognized Tuesday whereas addressing journalists after the committee’s assembly on the CBN headquarters in Abuja.
Mr Emefiele mentioned the hike in rate of interest would assist tackle Nigeria’s rising inflation.
The MPR refers back to the baseline rate of interest round which all different lending charges revolve.
Nigeria’s inflation rose in June to its highest stage in additional than 5 years, fueled by rising costs of meals and the excessive price of diesel.
The inflation fee surged to 18.60 per cent in June, up from 17.71 % within the earlier month, in line with the Nationwide Bureau of Statistics (NBS). The brand new fee is the best the nation has recorded since January 2017.
The NBS mentioned that the speed is 0.84 per cent factors greater in comparison with the speed recorded in June 2021, which is 17.75 per cent.
“Because of this the headline inflation fee elevated within the month of June 2022 when in comparison with the identical month within the earlier yr (i.e., June 2021),” the NBS mentioned in its report final Friday.
In the identical vein, the composite meals index rose to twenty.60 per cent in June 2022 on a year-on-year foundation, the NBS mentioned. The rise within the meals index was attributable to will increase in costs of bread and cereals, meals merchandise, potatoes, yam, and different tubers, meat, fish, oil and fats, and wine.
Analysts have questioned the effectiveness of elevating rates of interest in fixing the inflation drawback, arguing that costs are pushed excessive by low provide of products and important commodities.
On Tuesday, though the apex financial institution elevated the MPR fee, it retained different parameters.
The uneven hall stays +100 and -700 foundation factors across the MPR, whereas the Money Reserve Ratio (CRR) was put at 27 per cent.
“Committee thus voted unanimously to boost the Financial Coverage Price (MPR),” Mr Emefiele mentioned.
“One member voted to extend the MPR by 150 foundation factors, six members by 100 foundation factors, one member by 75 foundation factors and three members by 50 foundation factors.
“Consequently, Committee resolved to extend the MPR by 100 foundation factors from 13 per cent to 14 %. In abstract, MPC voted as follows: Enhance MPR to 14% from 13, retain the Uneven Hall at +100 and -700 foundation factors across the MPR, retain the CRR at 27.5 per cent and retain liquidity ratio at 30 per cent.”