The Monetary Policy Committee of the Central Bank of Nigeria has raised the interest rate to 18 percent.
The CBN governor, Godwin Emefiele disclosed this at the end of the two-day MPC meeting at the CBN headquarters in Abuja.
Emefiele explained that the rise in interest rate is to rein in inflationary pressure which is currently at 21.91 percent as of February 2023.
Emefiele said the committee members voted to hike the rate by 50 basis points to 18 per cent, 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 said although inflation has remained on the increase, the previous tightening measure has continued to reduce the rate of the price increase.
Addressing fears 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 had ensured the stability and sustenance of the banking system.
He cited 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,” Emefiele said.
“To reduce the gap in negative real rates we will continue to tighten but more moderately.”