CBN Hikes Interest Rate to 18% to Tame Inflation

By Adedapo Adesanya

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has voted to increase the benchmark interest rate by 50 basis points, bringing it to 18.00 per cent from 17.50 per cent.

This was disclosed by the CBN Governor, Mr Godwin Emefiele, on Tuesday while reading the communiqué of the 290th MPC meeting.

Mr Emefiele said the committee voted to keep the asymmetric corridor at +100 and -500 basis points around the MPR.

He also disclosed that the MPC voted to keep the Cash Reserve Ratio (CRR) at 32.5 per cent, as well as the Liquidity Ratio at 30 per cent.

The tightening of the rate, according to the apex bank governor, is expected to curtail inflation, which currently stands at 21.91 per cent as of February 2023 compared to 21.82 per cent in January.

Speaking on the Naira redesign policy, Mr Emefiele explained that the bank aligns itself with the Supreme Court’s judgement as currency in circulation (redesigned naira) is about N1 trillion.

Earlier today, Business Post reported that official statistics from the apex bank put the total at N982.09 billion.

He said that the bank would continue to pump more currency into the system but with caution so as to cushion the hardships faced by Nigeria while also seeking to mop up cash in circulation.

The central bank chief expressed confidence in the nation’s commercial banks, stating that they have remained resilient with the capital requirement at 13 per cent while non-performing loans stood at 4.2 per cent and the cash reserve of the banks rising to N14 trillion.