CBN increases Monetary Policy Rate to 18%
The Monetary Policy Rate (MPR) of the Central Bank of Nigeria (CBN) has been raised from 17.5 percent to 18 per cent by the Monetary Policy Committee (MPC).
This was said on Tuesday by CBN Governor Godwin Emefiele while reading the communique that the MPC released at the conclusion of its 290th meeting.
It went from 16.5% to 17.5% at the most recent MPC meeting in January, a rise of 100 basis points.
10 of the 12 committee members present at the meeting, according to Emefiele, voted in favour of a moderate increase in the MPR.
All other parameters, he claimed, remained constant.
Hence, the MPR's Asymmetric Corridor of +100/-500 basis points, 30% Liquidity Ratio, and 32.50% Cash Reserve Ratio (CRR) were all kept.
Emefiele claims that the group discussed whether to keep raising the interest rate to keep inflation in check.
According to him, the MPC also thought about holding the rate as it watched for new developments and gave the economy time to adjust to the effects of the previous five rate hikes.
“Loosening in the view of the committee members would undermine gains so far achieved.
“MPC observed the upward risk to price development and expectations of the removal of the Premium Motor Spirit (PMS) subsidy.
“These, in the view of members, provide a compelling argument for an upward adjustment of policy rate, albeit less aggressively,†he said.
He added that the redesign of the naira and the apex bank's cash withdrawal regulations have significantly decreased the amount of currency outside the banking system.
He claims that shows an increase in the effectiveness of the CBN's monetary policy tools.
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