CBN Hikes Interest Rate to 15.5% For Third Consecutive Time

The Evangelist edition
September 28, 2022
By King IBITOYE

The CBN’s Monetary Policy Committee (MPC) on Tuesday increased the Monetary Policy Rate (MPR) from 14 per cent to 15.5 per cent to tame inflation.

The committee had increased the MPR by 250 basis points at its last two meetings.

CBN governor, Godwin Emefiele, announced the new rate after the September bi-monthly MPC meeting in Abuja.

This is the third consecutive hike of the MPR, the benchmark interest rate for the country’s financial market in 2022.

The MPC also raised the cash reserve ratio to 32.5 per cent from 27.5 per cent while holding other parameters constant.

The asymmetric corridor, thus, remains at +100/-700 basis points around the MPR, and the liquidity ratio remains at 30 per cent.

The asymmetric interest rate corridor is a new tool developed to increase the flexibility of monetary policy.

“The MPC noted with concern the continued aggressive movement in inflation, even after the rate hike at its meeting in May and July.

“It expressed its unrelenting resolve to restore price stability while providing the necessary support to strengthen the fragile recovery,” Mr Emefiele said.

Some experts had earlier projected that the CBN would increase the rates to rein in inflation.

Umhe Uwaleke, an economist, had said the MPC would increase the MPR by at least 50 basis points.