The Central Bank of Nigeria (CBN) on Tuesday raised the Monetary Policy Rate (MPR), through which interest rate is measured, from 13 percent to 14 percent, explaining that the measure is to control rising inflation. MPR is the baseline interest rate in an economy, around which other interest rates in an economy revolves.
Last month, Nigeria’s inflation rate reached a five-year high at 18.60 percent.
After the meeting of the CBN’s policy-setting committee in Abuja, the Governor, Mr Godwin Emefiele told newsmen that the hike in interest rate would help tame rising inflation.
The development is the second consecutive time the apex bank would be raising the benchmark rate this year.
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.
During its third quarterly media briefing in 2022 on the state of the Nigerian economy, the Lagos Chamber of Commerce and Industry advised CBN to roll out more friendly supply-side policies to boost productive sectors.
The chamber said the rate hike alone would not curb inflationary pressures.
It emphasised the need for the CBN to pay attention to boosting supply and cushioning rising production costs caused by the high cost of energy and raw materials.