The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) increased the monetary policy rate (MPR), the benchmark interest rate, to 18.75 per cent on Tuesday.
After the committee’s meeting on Tuesday, which is the first without Godwin Emefiele in nine years, the interest rate was raised by 25 basis points from the 18.5 per cent reported in June.
Also, during the MPC meeting, the members voted to adjust the asymmetric corridor at +100 and -300 basis points around the MPR, from +100/-700 basis points.
The MPC voted that the financial regulator should retain the CRR at 32.5 per cent and the liquidity Ratio at 30 per cent.
Note that the CBN has been increasing the interest rate since May 2022, when it was 11.5 per cent, in a bid to tighten the monetary environment and curb inflation, which soared to 22.79 per cent in June.
The decision to raise the MPR will result in banks increasing the interest rate, thereby, increasing the cost of borrowing from the financial institutions.
Traders or businesses that borrow from the banks will pass the cost of credit to their customers, consequently hiking the prices of goods and services.
It will also increase the cost of living in Nigeria, where the price of fuel rose from N189 per litre to N580 in one month and the dollar rate rose from N461.50/$1 to N792/$1 in a space of two months.
