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CBN Increases Interest Rate To 18.5% amidst hardship

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CBN Governor - Godwin Emefiele
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CBN Increases Interest Rate To 18.5% 

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has unanimously decided to increase the monetary policy interest rate to 18.5%.

This action follows the March increase of 50 basis points to 18 percent in the benchmark interest rate.

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CBN Governor Godwin Emefiele disclosed the committee’s decision during the third MPC meeting of the year, held in Abuja. In addition, he stated that the asymmetric corridor that determines lending rates would remain at +100 and -700 basis points around the Monetary Policy Rate (MPR).

The MPC attributed the inflation rate increase to factors beyond the control of the CBN, such as rising energy costs and supply chain difficulties. Emefiele emphasised the importance of collaboration with the fiscal authority to address the underlying causes of inflation and the continuous monitoring of price development.

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Prior to the Monetary Policy Committee meeting, Nigerian financial analysts had predicted that the Central Bank of Nigeria and the Monetary Policy Committee would decide to increase lending rates.

This latest change follows a string of rate increases implemented by the central bank. Six consecutive increases brought the MPR from 11.5 percent to 18 percent beginning with the previous year.

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The Central Bank of Nigeria’s (CBN’s) decision to raise interest rates is intended to reduce inflationary pressures and maintain price stability in the Nigerian economy.

It is anticipated that the new interest rate increase will have repercussions for borrowing costs in various sectors, including businesses and individuals seeking loans. The impact of this decision on economic activity and financial markets will be closely monitored by market participants, particularly in terms of inflation dynamics and investment decisions.

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As Nigeria continues to confront the challenges posed by inflation, the CBN remains committed to implementing measures to promote sustainable economic growth and stability in collaboration with the fiscal authorities.

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