CBN raises interest rate to 18.75%

The apex bank stated that raising interest rates has made a significant difference in slowing the rate of inflation.

The Central Bank of Nigeria (CBN) increased the Monetary Policy Rate (MPR), which measures interest rates, from 18.5 percent to 18.75%.

Folashodun Shonubi, the acting governor of the Central Bank of Nigeria, made the announcement on Tuesday during the bank’s Monetary Policy Committee (MPC) meeting in Abuja.

This is the first decision made by the monetary committee since President Bola Tinubu took office on May 29, 2023.

It is also the committee’s first decision in nearly a decade without beleaguered Godwin Emefiele, who was suspended as governor of the central bank on June 9, 2023.

Nigeria’s headline inflation rate jumped to 22.79% in June, up from 22.41% in May 2023, due to rising food prices and the withdrawal of a subsidy on Premium Motor Spirit, also known as fuel.

This was according to the National Bureau of Statistics’ (NBS) most recent Consumer Price Index (CPI) data. The CPI monitors the rate of change in the prices of goods and services.

Shonubi told reporters at the CBN offices in Abuja on Tuesday that “raising the interest rate has made a lot of difference in moderating the rate of inflation.”

The CBN MPC voted to raise the MPR by 25 basis points to 18.75% from 18.5%. The committee reduced the asymmetric corridor to +100/-300 from +100/-700 and kept the Cash Reserve Ratio (CRR) at 32.5%.

He also predicted that the volatility of foreign exchange prices will soon return to normal.