Breaking: CBN Dumps Old Interest Rate, CRR Remains 27 Per cent

By Tosin Olatokunbo

The Central Bank of Nigeria, CBN has increased the Monetary Policy Rate, MPR also known as interest rate to 13 per cent.

The MPR is the benchmark interest rate for determining other interest rates in the economy.

It was was first time, in two years, that the Monetary Policy Committee, MPC under the leadership of CBN Governor Godwin Emefiele has raised the rate, which before now stood at 11.5 per cent.

The apex bank Governor announced this on Tuesday while speaking to reporters at the end of the monthly MPC meeting, in Abuja.

Emefiele said the rate was raised in line with recent global trends, explaining that the new 13 per cent interest rate will checkmate inflation in the country.

According to him, “The sharp rise in inflation across both the advanced and emerging market economies has generated growing concerns among central banks as the progressive rise in inflation driven by rising aggregate demands and wage growth has put sustainable pressure on price levels,” said Emefiele.

“Consequently, the major central banks such as the U.S. Fed, the Bank of England, European Central Bank, and Bank of Canada have provided strong guidance of a progressive shift away from monetary policy accommodation to drive market interest rate which may ultimately impact capital flows away from emerging market economies.”

Breaking down how the committee members voted, Emefiele disclosed that six out of the 11 members of the committee voted to raise the key rate.h

The committee, he explained, also voted to retain the asymmetric corridor at +100 and -700 basis points around the MPR, as well as Cash Reserved Ratio, CRR at 27 per cent.