CBN raises interest rate to 16.5% to tame inflation
The Central Bank of Nigeria raised its key rate to 16.5% on Tuesday in a sustained effort to control inflation and ease pressure on the naira.
Godwin Emefiele, Governor of the Central Bank of Nigeria (CBN), made the announcement after the Monetary Policy Committee meeting in Abuja. The CBN said previous increases were starting to show results and continued tightening was needed. It tightened by 100 basis points.
Mr. Emefiele announced that the committee also retained the cash reserve ratio (CRR) at 32.5%, and voted in favor of maintaining the asymmetric corridor at +100 and -700 basis points around the MPR. The liquidity ratio was maintained at 30%.
The cash reserve ratio is the share of a bank's total customer deposits that must be kept with the central bank in the form of cash, while the bank's liquidity ratio is the proportion of deposits and other assets it must retain to meet short-term obligations.
Earlier in the year, the CBN raised the Cash Reserve Requirement (CRR) to a minimum of 32.5% in an effort to mop up cash.
In October, Nigeria's inflation rate hit a 17-year high of 21.09% amid soaring food and gasoline prices.
The CBN also continued to face the daunting task of reducing currency in circulation, while curbing the rising cost of goods and services across the country.
As part of money supply control measures, the apex bank announced in October that it had redesigned all major naira banknotes and would begin circulating them by December 2022.
The naira appreciated to 775 naira to the dollar on the parallel section of the foreign exchange market on Monday, gaining 15 naira or 1.9% from the 790 naira traded last Friday. At the Investors and Exporters counter, the naira appreciated against the dollar, trading at 445.38 naira.
READ ALSO: Naira sees sharp drop after CBN interest rate hike
The central bank hopes the rate hike will reduce the money supply in the economy and curb inflation, but some analysts have also said the move may also slow economic growth.
A higher interest rate will increase the cost of borrowing for businesses and could make goods and services even more expensive for consumers as the holiday season approaches.
On Tuesday, Emefiele said global inflationary pressure was quite high and there was a need to moderate rising inflationary concerns. He added that the MPC had not considered the need to ease rates due to the current circumstances, although he said there were indications that previous decisions to keep the rates increased were starting to wear off. deliver results.
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The Central Bank of Nigeria raised its key rate to 16.5% on Tuesday in a sustained effort to control inflation and ease pressure on the naira.
Godwin Emefiele, Governor of the Central Bank of Nigeria (CBN), made the announcement after the Monetary Policy Committee meeting in Abuja. The CBN said previous increases were starting to show results and continued tightening was needed. It tightened by 100 basis points.
Mr. Emefiele announced that the committee also retained the cash reserve ratio (CRR) at 32.5%, and voted in favor of maintaining the asymmetric corridor at +100 and -700 basis points around the MPR. The liquidity ratio was maintained at 30%.
The cash reserve ratio is the share of a bank's total customer deposits that must be kept with the central bank in the form of cash, while the bank's liquidity ratio is the proportion of deposits and other assets it must retain to meet short-term obligations.
Earlier in the year, the CBN raised the Cash Reserve Requirement (CRR) to a minimum of 32.5% in an effort to mop up cash.
In October, Nigeria's inflation rate hit a 17-year high of 21.09% amid soaring food and gasoline prices.
The CBN also continued to face the daunting task of reducing currency in circulation, while curbing the rising cost of goods and services across the country.
As part of money supply control measures, the apex bank announced in October that it had redesigned all major naira banknotes and would begin circulating them by December 2022.
The naira appreciated to 775 naira to the dollar on the parallel section of the foreign exchange market on Monday, gaining 15 naira or 1.9% from the 790 naira traded last Friday. At the Investors and Exporters counter, the naira appreciated against the dollar, trading at 445.38 naira.
READ ALSO: Naira sees sharp drop after CBN interest rate hike
The central bank hopes the rate hike will reduce the money supply in the economy and curb inflation, but some analysts have also said the move may also slow economic growth.
A higher interest rate will increase the cost of borrowing for businesses and could make goods and services even more expensive for consumers as the holiday season approaches.
On Tuesday, Emefiele said global inflationary pressure was quite high and there was a need to moderate rising inflationary concerns. He added that the MPC had not considered the need to ease rates due to the current circumstances, although he said there were indications that previous decisions to keep the rates increased were starting to wear off. deliver results.
Donate
[embedded content]TEXT ANNOUNCEMENT: Call Willie - +2348098788999
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