Central Bank of Nigeria Raises Benchmark Interest Rate to 18.75% Amidst Inflationary Pressure
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has voted to increase the benchmark interest rate by 25 basis points to 18.75 per cent. The Acting CBN Governor, Folashodun Shonubi, made this announcement during the fourth MPC meeting of the year. The committee also adjusted the asymmetric corridor to +100 and -300 basis points around the MPR.
Analysts’ expectations were divided ahead of the meeting following the suspension of Godwin Emefiele as the CBN governor. The CBN had already initiated its monetary policy tightening cycle in May 2022, raising the benchmark interest rate from 11.5 per cent to 18.5 per cent in May 2023.
President Bola Ahmed Tinubu had advocated for reduced interest rates to stimulate investment and consumer purchasing and sustain economic growth.
With the recent removal of fuel subsidy, increasing energy prices, and exchange rate liberalization, inflationary pressures are expected to persist. The MPC’s decision to raise the interest rate indicates an aggressive approach to tackle these inflationary pressures.