By Aduragbemi Omiyale
The benchmark interest rate, the Monetary Policy Rate (MPR), has again been increased by the Central Bank of Nigeria (CBN) to 14 per cent.
The anchor rate was hiked by the apex bank on Tuesday after the end of its two-day Monetary Policy Committee (MPC) meeting held in Abuja.
The Governor of the CBN, Mr Godwin Emefiele, who announced the lifting of the rate while addressing newsmen, explained that the action was taken to curb the rising inflation in the country.
Over the weekend, the National Bureau of Statistics (NBS) said the inflation rate in Nigeria rose by 18.60 per cent in June 2022 and for members of the MPC, there is a need for an increase in the interest rate to control inflation, which jumped to its highest level in five years.
At its last meeting two months ago, the MPC raised the country’s baseline interest rate to 13 per cent from 11.5 per cent for the same reason.
However, every other policy rate was left unchanged by the team, with the asymmetric corridor still at +100 and -700 basis points around the MPR, the Cash Reserve Ratio at 27.5 per cent and the liquidity ratio at 30 per cent.
The MPR is the key rate other interest rates work with and it means no commercial bank would be able to lend money to customers at 14 per cent because it is the rate they borrow from the central bank.
The Nigerian economy has come under pressure lately as a result of rising food and fuel prices caused by the invasion of Ukraine by Russia and the scarcity of foreign exchange (forex).
In the midst of these issues, the federal government believes it has managed the nation’s economy very well with the support of the apex bank. However, some citizens do not agree with this, accusing the government of destroying the economy.
