The Central Bank of Nigeria, CBN raised the has raised the monetary policy rate (MPR), which measures interest rate, from 13 percent to 14 percent.
The monetary policy rate (MPR) is the baseline interest rate
in an economy, every other interest rate used within an economy is built on it.
The new interest rate comes barely two months after the apex
bank raised the interest rate to 13 per cent.
Addressing journalists on Tuesday, July 19, 2022, after the
committee’s meeting at the CBN headquarters in Abuja, Godwin Emefiele, governor
of the apex bank, said the hike in interest rate would help tame rising
inflation.
At its last meeting in May, the committee also raised MPR
from 11.5 percent to 13 per cent over the surge in fuel and food costs.
Emefiele said the committee members voted to hike the rate
by 100 basis points and retained the asymmetric corridor at +100 and -700 basis
points around the MPR and liquidity ratio at 30 percent.
Reacting to the first hike in interest rate, a report by
Analysts Data Services Resources (ADSR) had said that the decision of the CBN
to raise interest rate was unlikely to tame the country’s high inflation rate.
According to the ADSR in its monthly bulletin for June, the
hike in MPR was expected following the trend of raising rates in major
economies across the world.
It noted that most central banks are taking a tightening
position on the Policy Rates to curb rising inflation caused by the rise in
global prices of commodities and consumer spending.
The report, however, noted that rates hike, from available
experience, has impact on inflation mostly when done in quick successions.
Hence, the CBN might be on track issuing another raise in
interest rates, barely two months after the first.
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