CBN Raises Interest Rate To 18.75%

CBN Raises Interest Rate To 18.75%

The Central Bank of Nigeria (CBN) has increased the Monetary Policy Rate (MPR), an indicator of interest rates, from 18.5 percent to 18.75%.

Acting CBN Governor, Folashodun Shonubi, made the announcement on Tuesday after the bank’s Monetary Policy Committee (MPC) meeting in Abuja.

This is the first decision of the monetary committee since President Bola Tinubu assumed office on May 29, 2023.

It is also the first decision of the committee in about a decade without the presence of embattled Godwin Emefiele, who was suspended as the governor of the apex bank on June 9, 2023.

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The country’s headline inflation rose to 22.79% in June, up from 22.41% in May 2023, primarily due to soaring food prices and rising transportation costs resulting from the removal of subsidy on Premium Motor Spirit (petrol).

According to Shonubi, the decision to hike the interest rate has been effective in moderating the rate of inflation.

The CBN MPC voted to increase the MPR by 25 basis points to 18.75% from 18.5%. The committee also narrowed the asymmetric corridor to +100/-300 from +100/-700 and retained the Cash Reserve Ratio (CRR) at 32.5%.

Shonubi further stated that the volatility around foreign exchange rates is expected to normalize soon.

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