By Business A.M.
The monetary policy committee (MPC) of the Central Bank of Nigeria (CBN) has raised the monetary policy rate (MPR) by 50 basis points from 18.0 per cent set in March 2023 to 18.5 per cent.
Godwin Emefiele, the CBN governor and head of the highest policy making committee of the apex bank, made the disclosure at a press briefing following the end of the monetary policy committee meeting held at the CBN headquarters in Abuja.
The development means that commercial banks in Nigeria will use the 18.5 per cent MPR as a determinant for interest rates on loans requested by businesses and individuals.
Emefiele also disclosed that the asymmetric corridor was retained at +100 and -700 basis points around the MPR. He further stated that the Cash Reserve Ratio (CRR) and liquidity ratio were retained at 32.5 per cent and 30 per cent, respectively, by the monetary policy committee.
The CBN governor admitted that despite the MPC’s continuous MPR increase,the country’s inflation figure remains at a higher rate, jumping to 22.2 per cent in April 2023.
According to Emefiele, inflation would have risen to 30 per cent if the MPC did not raise its MPR in its last meeting, as reducing the MPR would hike inflation in the country,
He added that the MPC considered that holding the rate would reverse the success achieved in taming inflation, causing the members to take a unanimous decision to raise the interest rate.
According to Emefiele, the broad outlook for recovery suggests the economy will continue with moderate recovery due to security and other legacy challenges.
To this end, he urged the ministry of finance to expand the tax net as this will enhance the government’s revenue which would lead to debt reduction and its impact on inflation.
