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.

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

CBN Governor, Godwin Emefiele, briefs reporters on the outcomes of the MPC meeting at the apex bank’s headquarters in Abuja on May 24, 2022.

 

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has voted unanimously to raise the Monetary Policy Rate (MPR) to 13 per cent.

CBN Governor, Godwin Emefiele, announced this on Tuesday while briefing reporters at the end committee’s meeting at the apex bank’s headquarters in Abuja.

It is the first time in two and a half years that the policy-setting committee of the nation’s financial regulator would increase the MPR, which measures the interest rate.

The MPR is the baseline interest rate in an economy while every other interest rate used within such an economy is built on it.

READ ALSO: EFCC Operatives Storm Okorocha’s Abuja Residence

“The sharp rise in inflation across both the advanced and emerging market economies has generated growing concerns among central banks as the progressive rise in inflation driven by rising aggregate demands and wage growth has put sustainable pressure on price levels,” said Emefiele.

“Consequently, the major central banks such as the U.S. Fed, the Bank of England, European Central Bank, and Bank of Canada have provided strong guidance of a progressive shift away from monetary policy accommodation to drive market interest rate which may ultimately impact capital flows away from emerging market economies.”

Emefiele explained that at the 285th meeting of the MPC, six out of the 11 members of the committee voted to raise the key rate.

According to him, the committee also voted to retain the asymmetric corridor at +100 and -700 basis points around the MPR, as well as Cash Reserved Ratio (CRR) at 27 per cent.

The committee, the CBN governor stated, also voted to retain all other parameters. He advised the various banks in the country and the Federal Government to redouble efforts in supporting monetary authority.

CBN MPC Retains Rates At 11.5%

 

The Central Bank of Nigeria (CBN’s) Monetary Policy Committee has maintained its key lending rate at 11.5 per cent.

At the end of its two-day meeting on Tuesday in Abuja, the CBN Governor, Godwin Emefiele, mentioned that the committee members unanimously voted to retain the monetary policy rate at 11.5%, whilst keeping all other monetary parameters constant.

Read Also: Terrorists Plotting To Establish Camp In Niger, Govt Raises Alarm

This will be the 6th consecutive time this year that the rates remained unchanged.

The MPC also pointed out that its policy within the last few months is showing results, as reflected in the 4.03% growth in real GDP and the 7th consecutive monthly decline in Nigeria’s headline inflation.

CBN MPC Retains Rates At 11.5%

 

The Central Bank of Nigeria (CBN’s) Monetary Policy Committee has maintained its key lending rate at 11.5 per cent, with the asymetric corridor of +100 and -700 basis points around the MPR.

At the end of its two-day bi-monthly meeting on Friday, the MPC also retained the cash reserve ratio at 27.5 per cent, and liquidity ratio at 30 per cent, in line with analysts’ expectation.

This comes as the latest report from the National Bureau of Statistics show that Nigeria’s inflation moderated for the fifth consecutive month to 17.01 per cent in August.

Read Also: Nigeria’s Inflation Rate Drops Further To 17.01% In August – NBS Report

At its last meeting in July, the CBN MPC voted to hold all policy parameters constant, believing that it would enable the continued passage of current policy measures in supporting the growth recovery recorded in the second quarter and macro-economic stability.

Economic Recession: CBN Retains Key Lending Rates

 

The Monetary Policy Committee has retained key lending rates at 11.5%.

Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, announced this on Tuesday, saying it is part of efforts to boost the economy towards a sustainable recovery from the recession.

“Members voted in line with the most pressing need towards reversing the recession and achieving medium-term macro-economic stability.

“In view of the fore-going, the committee decided by a unanimous vote to retain all parameters,” Emefiele said.

“In summary, MPC voted 1, to retain MPR at 11.5%, (2), retain asymmetric corridor of +100 and -700 basis points around the MPR, (3) retain Cash Reserve Ratio at 27.5% and (4), retain liquidity ratio at 30%.”

This comes days after a new report released by the Nigeria Bureau of Statistics, showed that Nigeria had slipped into another recession after the economy shrank in the third quarter of this year.

Read Also: Again, Nigeria’s Economy Slips Into Recession

The same happened in 2016, making it the second recession in a space of four years.

The cumulative Gross Domestic Product (GDP) for the first nine months of 2020, therefore, stood at -2.48 per cent just as it recorded a -6.10 per cent in the second quarter.

According to Emefiele, the recession was anticipated and measures had been put in place to manage its impact.

Meanwhile, the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, on Monday, said the country will exit recession by the first quarter of 2021.

CBN Reduces Monetary Policy Rate To 11.5%

 

The Central Bank of Nigeria has cut the Monetary Policy Rate from 12.5 per cent to 11.5 per cent.

Central Bank Governor Godwin Emefiele announced this on Tuesday while presenting a communiqué after the two-day Monetary Policy Committee Meeting in Abuja.

The MPC, however, opted to retain the Cash Reserve Ratio at 27.5 per cent and the liquidity ratio at 30 per cent.

“In the face of declining economic growth and rise in inflation, committee faced a difficult set of policy choices requiring trade-offs and sequencing,” he said.

According to Emefiele, reducing the MPR will put pressure on the deposit money banks to lower cost of credit and the cheaper credit will improve demand, stimulate production, reduce unemployment and support the recovery of output growth.

CBN Retains Interest Rate At 12.5%

Governor of the Central Bank of Nigeria, Mr Godwin Emefiele, speaks to the press about the Monetary Policy Committee meeting of June 20, 2020

 

The Monetary Policy Committee of the Central Bank of Nigeria has retained the monetary policy rate at 12.5 per cent.

Governor of the Central Bank, Mr Godwin Emefiele announced this at the end of the MPC’s meeting on Monday.

Emefiele explained that other parameters were held constant, leaving the CRR at 27.5% and the liquidity ratio at 30%.

He added that the move to tighten will contradict the initiative of expansion of affordable credit to the real sector while increasing MPR at the stage will be counter-intuitive and will result in upward pressure on market rates and cost of production and a further cut will not be realistic

The CBN Governor stated that the earlier loosening to 12.5% in May is yielding positive impact as credit growth increased significantly in the economy and more time needs to be given for the impact to be felt further.

According to him, the nation’s Gross Domestic Product (GDP) grew in the first quarter of 2020.

“Available data from the National Bureau of Statistics showed that real Growth Domestic Product (GDP) grew marginally by 1.87 per cent in the first quarter of 2020 compared with the 2.25 per cent and 2.10 per cent in the proceeding and corresponding quarters of 2019,” he said.

Although the CBN Governor noted that there was a decline in output growth, he, however, attributed the decline to the COVID-19 pandemic.

“The performance was largely driven by 5.06 per cent growth in the oil sector and 1.55 growths in the non-oil sector. The decline in output growth in the first quarter was largely attributed to the decline in the oil prices and the shock from the COVID-19 pandemic.

“The Committee observed the gradual but persistent decline in the manufacturing and non-Manufacturing Purchasing Indices below the benchmarks. 10 members of the committee were in attendance,” he said.

Eight members of the committee voted in favour of holding the MPR, while two members wanted it reduced.

In addition to the MPR, the Cash Reserve Ratio (CRR) was retained at 27.5 per cent, liquidity ratio at 30 per cent, while the Asymmetric Corridor was retained at +200/-500 basis points.

 

FAAC: Avoid Sharing All Proceeds From Federation Account, CBN Tells FG

 

The Federal Government has been asked to caution the rate at which all the proceeds from the Federal allocation are being shared across all tiers of government.

This is according to the Monetary Policy Committee (MPC) of the Central Bank of Nigeria who disclosed this on Friday at the apex bank’s headquarters in Abuja.

The committee headed by the governor of the apex bank, Godwin Emefiele, called on the fiscal authorities to ensure that they build cushions that will help reduce the rising public debt.

READ ALSO: CBN Retains MPR At 13.5 Percent, Raises CRR To 27.5

The MPC noted that the rate at which public debt was rising faster than both domestic and external revenue is a major concern that the fiscal authorities should strongly consider.

“The MPC, however, cautioned that public debt was rising faster than both domestic and external revenue, noting the need to tread cautiously in interpreting the debt to GDP ratio.

“The Committee also noted the rising burden of debt services and urged the Fiscal Authorities to strongly consider building buffers by not sharing all the proceeds from the Federation Account at the monthly FAAC meetings to avert a macroeconomic downturn, in the event of an oil price shock.”

The committee noted that the reliance on oil should gradually reduce and the Federal Government should ensure that the cost of governance is reduced.

“Government to gradually reduce reliance on oil receipts and focus on revenue diversification through reforms of the tax system.

“The Committee also called on Government to rationalize fiscal expenditure towards reducing the current excessively high cost of governance.”

In December 2019, a total of N716.298 billion was shared between the Federal Government, States, and Local Government Councils.

According to the Deputy Director, Press and Public Relations, Federation Accounts Allocation Committee (FAAC), Henshaw Ogubike, the total sum comprised revenue from Value Added Tax (VAT), Exchange Gain and the Statutory Revenue.

Ogubike stated that as of January 15, 2020, the balance in the Excess Crude Account (ECA) was $324.968 million.

MPC Retains MPR At 13.5%

CBN Governor, Godwin Emefiele.

 

The Monetary Policy Committee of the Central Bank of Nigeria has retained the Monetary Policy Rate at 13.5%.

Governor of the Central Bank, Godwin Emefiele, made the announcement on Friday during the MPC meeting in Abuja.

This is the sixth month the apex bank has maintained the rate after it was dropped from 14% to 13.5% in March.

According to Emefiele, the decision was unanimously agreed upon by all committee members.

He said, “The committee has decided by a unanimous vote to maintain Monetary Policy Rate at 13.5% and to hold other policy parameters constant.

“In summary, the MPC voted to retain MPR at 13.5%, to retain asymmetric corridor at +200 and -500 basis points around the MPR, to retain CRR at 22.5% and to retain the liquidity Ratio at 30%”.

MPC Reduces Monetary Policy Rate For First Time In Over Two Years

 

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has reduced the Monetary Policy Rate (MPR) by 50 basis points to 13.50 per cent from 14 per cent.

The CBN Governor, Mr Godwin Emefiele, disclosed this during a press conference at the end of a two-day MPC meeting held on Tuesday in Abuja.

READ ALSO: CBN Projects 12% Rise In Inflation

This is the first time the MPR will be reduced since July 2016.

The MPC, however, held all other key parameters remain unchanged; Cash Reserve Requirement (CRR) remained at 22.5 per cent, while the liquidity ratio was kept at 30 per cent.

Mr Emefiele explained that the cut in the rates was to support the nation’s feeble economic growth at this time.

He added that the decision was aimed at reducing the rate of unemployment and diversifying the country’s economy.