CBN raises interest rate to 14%, second time in 2022

The Central Bank of Nigeria, CBN raised the has raised the monetary policy rate (MPR), which measures interest rate, from 13 percent to 14 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.

The new interest rate comes barely two months after the apex bank raised the interest rate to 13 per cent.

Addressing journalists on Tuesday, July 19, 2022, after the committee’s meeting at the CBN headquarters in Abuja, Godwin Emefiele, governor of the apex bank, said the hike in interest rate would help tame rising inflation.

At its last meeting in May, the committee also raised MPR from 11.5 percent to 13 per cent over the surge in fuel and food costs.

Emefiele said the committee members voted to hike the rate by 100 basis points and retained the asymmetric corridor at +100 and -700 basis points around the MPR and liquidity ratio at 30 percent.

Reacting to the first hike in interest rate, a report by Analysts Data Services Resources (ADSR) had said that the decision of the CBN to raise interest rate was unlikely to tame the country’s high inflation rate.

According to the ADSR in its monthly bulletin for June, the hike in MPR was expected following the trend of raising rates in major economies across the world.

It noted that most central banks are taking a tightening position on the Policy Rates to curb rising inflation caused by the rise in global prices of commodities and consumer spending.

The report, however, noted that rates hike, from available experience, has impact on inflation mostly when done in quick successions.

Hence, the CBN might be on track issuing another raise in interest rates, barely two months after the first.