The policy-setting committee of the Central Bank of Nigeria (CBN) has raised the monetary policy rate (MPR), which measures interest rate, from 17.5 percent to 18 percent.
Governor of the apex bank, Godwin Emefiele announced the new development to reporters on Tuesday after the committee’s meeting at the CBN headquarters in the Federal Capital Territory.
Emefiele stated that the committee members voted to raise the rate by 50 basis points to 18 percent, retain the asymmetric corridor at +100 and -700 basis points around the MPR, retain the cash reserve ratio (CRR) at 32.5 percent and liquidity ratio at 30 percent.
He noted that although inflation has stayed on the increase, the previous tightening measure has continued to reduce the rate of price increase.
Addressing worries of the effect of the hawkish stance on the banking industry, the CBN governor said the apex bank’s stringent micro and macro-prudential guidelines have ensured the stability and sustenance of the banking system.
He named factors such as the planned petrol subsidy removal as one of the reasons for the tightening stance of the monetary policy committee.
“Whether we like it or not, subsidy removal will likely be removed before the end of this administration in May,” said, who added that “to reduce the gap in negative real rates we will continue to tighten but more moderately.”
