CBN Raises Interest Rate To 15.5%

CBN Governor, Godwin Emefiele, briefs reporters in Abuja on Tuesday, September 27, 2022

 

 

The Central Bank of Nigeria (CBN) has raised the Monetary Policy Rate (MPR), which measures interest rate, to 15.5 percent from 14 percent.

This is meant to tame rising inflation.

CBN Governor, Godwin Emefiele, made this known after an MPC meeting in Abuja on Tuesday.

Emefiele said, “The committee voted unanimously to raise the MPR…The MPC voted to raise the MPR to 15.5, retain the asymmetric corridor at +100 -700 basis points around the MPR. Increase the Cash Reserve Ratio (CRR) to a minimum of 32.5% and retain liquidity ratio at 30%.”

The CBN chief explained that members deliberated the impact of the widening margin between the current policy rate of 14 percent and the inflation rate of 20.52 percent.

“At this meeting, the option of reducing the policy rate was not considered as this would be gravely detrimental to reigning in inflation. The committee thus agreed unanimously to raise the policy rate to narrow the interest rate gap and reign in inflation. The committee thus voted unanimously to raise the MPR.

“10 members voted to raise the MPR by 150 basis points, one (voted to raise it) by 100 basis points, and one by 50 basis points. 10 members voted to increase CRR (Cash Reserve Ratio) by 500 basis points, while two members voted to increase it by 750 basis points,” he said.

CBN Raises Interest Rate To 14% To Check Inflation

 

The Central Bank of Nigeria (CBN) has raised the Monetary Policy Rate (MPR) from 13 percent to 14 percent.

CBN Governor Godwin Emefiele announced this on Tuesday during the 286th meeting of the Monetary Policy Committee held in Lagos.

READ ALSO: UPDATED: CBN Raises Interest Rate For First Time In Over Two Years To 13%

According to him, it was the right option considering economic realities.

CBN Governor, Ifeanyi Emefiele, speaks during the bank’s 286th MPC meeting in Lagos on July 19, 2022.

 

“The committee resolved that the most rational policy option would be to further strengthen its tightening stance in order to effectively curtail the unabated rising trend of inflation,” 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 monetary policy rate (MPR) is the main interest rate in a country or economy on which all other interest rates in that economy are based.

While the apex bank increased the MPR rate, it, however, retained other parameters.

The asymmetric corridor remains +100 and -700 basis points around the MPR, and the well as Cash Reserved Ratio (CRR) at 27 percent.

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 percent to 14 percent. 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 percent and retain liquidity ratio at 30 percent.”

Tuesday’s rate hike marks the second time, the MPC will raise the interest rate in two months.

The MPC increased the rate from 11.5 percent to 13 percent on May 24.

Meanwhile, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, is worried about the implication of the new interest rate for the economy.

Although the MPC expects the step to tame inflation, Dr Yusuf, thinks the opposite may be the case.

“I am concerned about MPR hike because it will burden manufacturers and investors; factors driving inflation in Nigeria different from factors driving inflation in other countries CBN is comparing Nigeria with,” he said during an appearance on Channels Television’s live show on the MPC decision.

MPC Leaves Monetary Policy Rate At 14%

Godwin-Emefiele-Governor-of-Central-Bank-NigeriaThe Monetary Policy Committee in Nigeria has retained a 14% Monetary Policy Rate at the end of its first meeting for 2017.

The rate was announced by the Governor of the Central Bank, Mr Godwin Emefiele, at the end of the meeting held on Tuesday in the nation’s capital, Abuja.

He said the decision was reached after the committee members considered the economic outlook of Africa’s largest economy.

“The Committee in consideration of the headwinds in the domestic economies and uncertainties in the global environment, decided by a unanimous vote to retain the MPR a 14% alongside all other policy parameters,” he stated.

Briefing reporters at the end of the meeting, Mr Emefiele said: “With output growth improving sluggishly, the outlook for 2017 remains unchanged, owing to persisting uncertainties on commodity prices and volatility in financial market as well as slowing demand in the advanced economies and emerging market.

“The MPC welcomed the modest increase in oil prices following the last OPEC decision to cut output and noted the increase in the policy rate of the United States FED in December 2016 and the potential implications of that decision on international interest rates and capital flows.

“While noting the materiality of the cut in oil output, the committee cautioned that the effect could rapidly wane giving a likelihood of a supply glut from non-OPEC members, low level of global economic activity and weak growth”.

He also stated that the committee observed that the medium term outlook continued to be muffled by stagnation and uncertainty in the prospects of global trade, subdued investments and heightened policy uncertainty especially in some major economies.

Mr Emefiele, however, observed that the IMF had estimated that the constraints would decline, paving way for mild improvements in economic growth from 3.1% in 2016 to 3.4% in 2017.

On the Capital Market the Central Bank Governor said: “The Committee welcomes the improvement in the equities segment of the Capital Market, as the All Share Index rose by 2.84% from 25,499 on November 21, 2016 to 26,223.54 on January 20, 2016”.

The committee said available data on key economic variables showed a more stable economy in 2017, saying growth is expected to turn positive, as the fiscal state becomes more accommodative.

“The agricultural sector is expected to play a more significant role in driving growth, giving the expansion of Anchor Grower Programme and other developmental initiatives of the Federal Government,” he further said, reading from resolutions reached at the meeting.

The liquidity ratio and the Cash Reserve Ratio (CRR) were also unchanged.

While the liquidity ratio remains 30% the CRR is 22.50%.

It also retained the asymmetric corridor at +200 and -500 basis points around the MPR.

Ten out of 11 members of the committee were present at the meeting.

MPC Raises Monetary Policy Rate To 12%

MPCThe Monetary Policy Committee (MPC) of the Central Bank of Nigeria has raised the Monetary Policy Rate (MPR) to 12% from 11%.

This is an outcome of its 2-day meeting which started on Monday in Abuja, the nation’s capital; the second for the year 2016.

At the last meeting in January, the MPC maintained the monetary policy rate, the cash reserve requirement, and the liquidity ratio at 11%, 20% and 30% respectively.

The Governor of the central bank said that the key decisions taking by the regulator were part of measures for achieving fiscal and financial stability.

MPC Meeting Begins Next Week

MPC meetingThe Monetary Policy Committee of the Central Bank of Nigeria will hold its second meeting for the year next week.

At the two-day meeting, market watchers expect the increase in the February inflation rate and the issues surrounding the foreign exchange market to top the agenda.

They are also of the opinion that an increase in key rates and adjustment in the exchange rate may reduce speculative demand for foreign exchange.

At the last meeting in January, the MPC maintained the monetary policy rate, the cash reserve requirement, and the liquidity ratio at 11%, 20% and 30% respectively.

The outcome of the MPC meeting will be announced on Tuesday, March 22, 2016.

CBN Cuts Interest Rate

CBNNigeria’s Central Bank on Tuesday cut policy interest rate for the first time in almost four years.

At the end of its two-day rate setting meeting, the CBN Chief, Godwin Emefiele announced a 200 points cut to 11% in headline interest rate from 13% previously.

The financial regulator also shaves-off the Cash Reserve Ratio (CRR) sharply from 25% to 20%, the deepest cut in the harmonised rate following a smaller easing done by the CBN last September.

The decision to cut both the policy rate and the harmonised cash reserve ratio, the CBN Governor said, was to engineer growth by increasing the flow of lending to critical sectors of the economy like agriculture, solid minerals, critical social infrastructure and manufacturing.

 

Nigeria’s Poor Infrastructure Will Frustrate Single Digit Interest Rate – Sanusi

The governor of the Central Bank of Nigeria (CBN), Sanusi Lamido has defended the double digit monetary policy rate currently being adopted by the bank’s monetary policy committee, warning that loans at single digits is of no use to the nation’s real sector with the derelict infrastructure.

He was speaking during an interactive session with the House of Representatives’ committee on banking and currency which sought to understand why monetary policy rates are high in the country.

The CBN governor said while it would be very easy for the apex bank to double the money in the system, which would lead to a crashed interest rate, it would hurt the economy as inflation will rise.

MPR At 12% Will Make It Difficult For Nig’s Private Sector To Create Jobs

Financial analyst; Wole Oluwo, has decried the retention of the nation’s Monetary Policy Rate (MPR) by the Central Bank of Nigeria (CBN), at 12 percent saying that a trade off might soon occur from the failure of the regulatory authorities to balance the achievement in other economic indicators such as the exchange rate and foreign reserve with a high interest rate.

Mr Oluwo on Channels Television’s Business Morning, warned that no matter the growth rate of the country, even if Nigeria’s economy is growing at 10 percent, the ordinary man can never feel the impact of such growth except if his business is able to access money via a lower interest rate.

It will also help reduce cost, he added.

He warned of an impending trade-off that can spike the inflation rate which the CBN is closely guiding to be retained at a single digit.

Oluwo ask why the CBN would rather have an economy where inflation rate is at a single digit but the average business owner cannot get a loan at single digit.