CBN provides justification for increasing interest rates to 18.5%
The Monetary Policy Rate, generally known as the interest rate, was raised by the Central Bank of Nigeria from 18 to 18.5 percent.
Godwin Emefiele, the governor of the central bank, stated in a communique from the 291st Monetary Policy Committee meeting that was posted on the CBN website on Wednesday that the investigation and research revealed that the country's interest would have been higher but for its intervention by raising interest rates.
Emefiele claims that if the MPC had not increased interest rates, Nigeria's April inflation rate of 22.22 percent would have increased to 30.48 percent.
Since May 2022, the bank's move to hike interest rates has successfully restrained the nation's rising inflation rate.
"The findings showed that the rise in inflation reduced following each monetary policy rate hike relative to what it may have been if the MPC had not aggressively raised rates at all.
"The empirical evidence presented showed that while inflation in April 2023 stood at 22.22 percent, the counterfactual evidence suggests that, had the MPC not taken any action to raise policy rates as it did since May last year, it could have increased to 30.48 percent in April 2023," he said.
According to Bendelnews, CBN's MPC increased the interest rate to 18.5%.
The CRR remained at 32.5%, the Liquidity Ratio remained at 30%, and CBN preserved the Asymmetric Corridor of +100/-700 basis points around the MPR.