By Tony Obiechina, Abuja
The Central Bank has raised the Monetary Policy Rate ( MPR) to 13.5 per cent from the current 12 percent.
This is the first time the apex Bank will announce a change in the interest rate since September 2020.
The Governor of the Central Bank, Godwin Emefiele, disclosed this while reading the communique of the MPC’s 142nd meeting in Abuja onTuesday.
Among the reasons for increasing MPR from 11.5 per cent is to mop up liquidity ahead of election spending.
Nigeria’s inflation had risen to 16.82 per cent in April thereby complicating the central bank’s effort to manage the growing prices.
Although Nigeria’s economy is on the growth trajectory, the growth recorded is still fragile according to analysts.
In the first quarter, the National Bureau of Statistics said GDP growth was at 3.11 per cent.
Global inflationary pressure has influenced policy tightening as the International Monetary Fund also called on central banks for higher interest rates.
According to the CBN Governor, Godwin Emefiele, high energy prices, logistics issues for agric products and epileptic power supply worsened Nigeria’s inflationary pressure.
The governor said the bank’s outlook is gloomy due to the sanctions on Russia.
Emefiele said the MPC has decided to take a cautious shift to a policy hike that would sustain economic recovery.
MPC said tightening will help curb inflationary pressure before it reaches a galloping trend.
CBN said tightening will also provide incentive for capital inflow and restore investors’ confidence.
Emefiele added that reducing the MPR would also pressure the country’s exchange rate and lead to further depreciation of the Naira.
MPC Committee Decision Increased the MPR to 13 per cent
Retain the Asymmetric Corridor of +100/-700 basis points around the MPR
Retain the CRR at 27.5 per cent Retain the Liquidity Ratio at 30 per cent
