• Mon. May 29th, 2023

CBN Raises Interest Rate to 18.5% in Aggressive Move to Curb Inflation

ByJustice Godfrey Okamgba

May 24, 2023

The Central Bank of Nigeria made a significant move on Wednesday by raising its benchmark lending rate to 18.5 percent, up from the previous rate of 18 percent.

This bold action was taken as a proactive measure to combat the rising inflationary pressures in the country.

Governor Godwin Emefiele, addressing the media after the two-day Monetary Policy Committee (MPC) meeting in Abuja, announced the decision.

He stated that the committee agreed to maintain the asymmetric corridor at +100 and -700 basis points around the Monetary Policy Rate (MPR).

Additionally, the committee unanimously agreed to retain the Cash Reserve Ratio (CRR) at 32.5 percent and the Liquidity Ratio at 30 percent.

Mr. Emefiele revealed that ten members voted in favor of raising the MPR by 15 basis points, while one member suggested an increase of 25 basis points. However, all members agreed to maintain consistency across all parameters.

The CRR represents the portion of a bank’s total customer deposits that must be held in liquid cash form with the central bank, while the liquidity ratio signifies the proportion of deposits and other assets that banks must maintain to fulfill short-term obligations.

It’s worth noting that this move follows a previous rate hike in January, where the MPC increased the benchmark lending rate from 16.5 percent to 17.5 percent.

These successive actions demonstrate the bank’s commitment to tackling inflation and alleviating pressure on the nation’s currency, the Naira. However, the expected results still remains questionable as inflation continues to rise.


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