CBN Raises Interest Rate to 18.5% Amidst Rising Inflation Concerns

EKO HOT BLOG reports that in a unanimous decision, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has announced an increase in the monetary policy interest rates to 18.5 percent.

This move comes after a 50 basis points increase in the benchmark interest rate to 18 percent in March.

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During the third MPC meeting of the year held in Abuja, CBN Governor Godwin Emefiele revealed the committee’s decision. He also stated that the asymmetric corridor, which determines the lending rates, would remain at +100 and -700 basis points around the Monetary Policy Rate (MPR).

The MPC attributed the rising inflation rate to factors such as high energy costs and challenges in the supply chain, among others, which are beyond the control of the CBN. Emefiele emphasized the need for collaboration with the fiscal authority to address the underlying drivers of inflation and the continuous monitoring of price development.

Financial analysts in Nigeria had previously predicted that the CBN and the MPC might opt for an increase in lending rates during the Monetary Policy Committee meeting.

This latest adjustment follows a series of rate hikes implemented by the apex bank. Starting from last year, the MPR was raised from 11.5 percent to 18 percent in six consecutive hikes.

The CBN’s decision to raise interest rates aims to curb inflationary pressures and maintain price stability in the Nigerian economy.

The new interest rate hike is expected to have implications for borrowing costs across various sectors, including businesses and individuals seeking loans. Market participants will closely monitor the impact of this decision on economic activity and financial markets, particularly in relation to inflation dynamics and investment decisions.

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As Nigeria continues to navigate the challenges posed by inflation, the CBN remains committed to implementing measures aimed at supporting sustainable economic growth and stability, in collaboration with the fiscal authorities.

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