The Central Bank of Nigeria (CBN) increased the monetary policy rate (MPR) or interest rate from 18.5% to 18.75% in an effort to reduce inflation.
The CBN’s Monetary Policy Committee (MPC) announced the decision following a meeting in Abuja on Tuesday.Â
This is the first monetary committee decision made after President Bola Tinubu‘s inauguration on May 29, 2023.
The MPR is Nigeria’s benchmark interest rate, and it influences the cost of borrowing for both businesses and individuals.
Folashodun Adebisi Shonubi, the acting CBN Governor, presided over the Monetary Policy Committee meeting. The meeting was attended by eleven members of the committee, according to Shonubi.
In Nigeria, inflation reached 22.79% in June 2023. The main causes of inflation are rising food prices and the naira’s depreciation.
Interest rates were lifted from 18.0 percent to 18.5 percent during the preceding Monetary Policy Committee meeting held by former CBN governor Godwin Emefiele. Prices, meanwhile, have remained high.
Shonubi noted that the withdrawal of subsidies and the unification of the local exchange rate contributed to the recent increase in inflation. He acknowledged the presence of foreign exchange pressures, which are causing economic uncertainty.
The Acting CBN Governor predicted that the economy would continue to recover at a 2.66 percent annual rate.
According to the CBN chairman, 6 members voted to boost MPR while 5 voted to keep rates same.
They also resolved to reduce the asymmetric corridor surrounding the MPR from +100 to -700 basis points, which is currently at 18.75.
