The Central Bank of Nigeria’s Monetary Policy Committee has increased benchmark interest to 13 percent from 11.5 percent. It is the first change since September 2020.
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.
Godwin Emefiele, Central Bank governor who announced the decision after the MPC meeting on Tuesday, said the rise was triggered by inflation.
The rate had previously been put at 11.5% since September 2020, in an attempt to facilitate economic growth away from the recession witnessed in 2020 due to the covid-19 pandemic, but has now been raised by the apex bank after the inflation rate spiked above 16%.
The MPC also approved a new cheque standard for banks, the Bank’s complex documentation, which makes it harder to access foreign exchange for Nigerians.
“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.”