Central Bank of Nigeria raises interest rate to 17.5%

The Central Bank of Nigeria (CBN) has jerked up the monetary policy rate (MPR), which calculates interest rate, from 16.5 percent to 17.5 percent to control inflation “aggressively”.

Last month, the country’s inflation rate dropped slightly from 21.47 percent to 21.34 percent.

The monetary policy rate (MPR) is the baseline interest rate in an economy, every other interest rate used within an economy is built on it.

Governor of the CBN, Godwin Emefiele disclosed the development to reporters on Tuesday after the meeting of the apex bank committee’s at the global headquarters of the CBN in the Federal Capital Territory.

The CBN helmsman stated that the committee was of the opinion that, although inflation rate hovered marginally last month, but the economy remains innaundated with the risk of high inflation with negative effects on the general standard of living of Nigerians .

Emefiele clarified that slackening the rate would reverse the objective of damping pent-up aggregate demand which propelled inflation.

“One member voted to increase the MPR by 150 basis points, four members by 50 basis points and seven members by 100 basis points. In summary, MPC voted to raise MPR to 17.5 percent,” said Emefiele..

Turning his attention to the January 31 deadline for the phasing out of old naira notes, the CB governor stated that there was no going back on the date, pointing out that the time given for the deposit of the old naira notes was enough for Nigerians to go to commercial banks and get new notes.

“I don’t have good news for those who feel we should shift the deadline; my apologies. The reason is because 90 days should be enough for those who have the old currency to deposit it in the banks”, said Emefiele.