BREAKING: MPC increases interest rate to 14%

The Monetary Policy Committee (MPC) members of the Central Bank of Nigeria (CBN) on Tuesday voted to increase the Monetary Policy Rate (MPR) or interest rate by 100basis points to 14 per cent from 13 per cent.

The Committee also voted to retain the Cash Reserve Requirement (CRR) at 27.5per cent, liquidity ratio at 30per cent and asymmetric corridor around the MPR at +100bps/-700basis points.

Analysts at investmentone research said, “At the just concluded meeting, 1 member voted for a 150basis points hike in rates, six voted for a 100bps hike, 1 voted for a raise of 75basis points and 3 voted for a 50basis points raise. 

“Unlike other meetings where the CBN adopts a Wait and See approach after a policy decision, this is the second consecutive time the Apex Bank will be taking a hawkish policy stance after raising rates by 150bps at the last meeting in May 2022.

“While we expected a hold status-quo stance given the fact that the last aggressive hike of 150bps is yet to permeate the economy as seen in recent economic data, particularly with respect to inflation.

“We opine that the decision of the MPC was predicated on the need to clamp down on the persistent elevated inflationary pressures witnessed in the past five consecutive months and exchange rate pressures due to capital outflows stemming from policy normalisation in global economies. Imperatively, we highlight that the monetary authorities seem to be toeing the aggressive policy tightening path of other Central Banks across globe with a strong determination to fight rising price pressures and its attendant effect on the overall performance of the economy.”