CBN Increases Interest Rate by 0.25% to 18.75%

The Central Bank of Nigeria (CBN) has increased the benchmark interest rate by 25 basis points to 18.75 per cent from 18.50 per cent.

This information was disclosed by the acting Governor of the apex bank, Mr Folashodun Shonubi, while addressing journalists in Abuja on Tuesday evening.

The markets closed today without a clear stance on where the CBN stood regarding the country’s interest rate after the Monetary Policy Committee (MPC) of the central bank commenced its meeting on Monday.

The 292nd MPC gathering was the first meeting since the embattled CBN chief, Mr Godwin Emefiele, was removed from office last month by President Bola Tinubu.

He was arraigned at the Federal High Court in Lagos today on charges bordering on illegal possession of firearms and ammunition by the Department of State Services (DSS).

At the MPC meeting today, the acting CBN Governor said members of the team agreed to slow the tightening of the rates, adding that the asymmetric corridor was narrowed to +100/-300 from +100/-700 around the Monetary Policy Rate (MPR), which is the benchmark interest rate, while the Cash-Reserve Ratio (CRR) was maintained at 32.5 per cent.

At the last MPC meeting held in May chaired by Mr Emefiele, the 11-man committee agreed to raise the interest rate from 18.0 per cent to 18.5 per cent in an attempt to tame the soaring inflation rate, which at that time stood at 22.41 per cent. It rose to 22.79 per cent last month, according to the National Bureau of Statistics (NBS).

Since then, many things have changed, including the swearing-in of a new president and the liberalisation of the foreign exchange market.

Prior to the meeting, market analysts had expected further hikes to arrest the surging inflation.

Bank of America (BOA) warned that inflation might quicken to 30 per cent by the end of the year after President Tinubu scrapped fuel subsidies that cost about N4.3 trillion last year and unified the foreign exchange market, sending the exchange rate 40 per cent higher.