The Central Bank of Nigeria’s Monetary Policy Committee (MPC) has unanimously decided to raise the monetary policy interest rate to 18.5 percent.
News About Nigeria reports that this decision follows the previous increase in March, where the benchmark interest rate was raised by 50 basis points to 18 percent.
Governor Godwin Emefiele announced this during the third MPC meeting of the year in Abuja.
During the meeting, Governor Emefiele stated that the committee voted to maintain the asymmetric corridor at +100 and -700 basis points around the Monetary Policy Rate (MPR).
The rising inflation rate was attributed to factors such as high energy costs and challenges within the supply chain, which are beyond the control of the CBN.
To address these inflationary drivers, the bank will continue to closely monitor price developments and collaborate more closely with fiscal authorities.
Prior to the MPC meeting, analysts in Nigeria had already anticipated that the CBN and the MPC would raise the lending rates.
The CBN had previously implemented six consecutive rate hikes, increasing the MPR from 11.5 percent last year to the current 18 percent.
By increasing the rates, the CBN aims to address the underlying drivers of inflation and promote a more favorable economic environment.
This decision comes in response to the persistently high inflation rates experienced in Nigeria, driven by various external factors and challenges within the supply chain.
Moving forward, the CBN will continue to work closely with fiscal authorities to implement measures that can effectively manage inflationary pressures.
The collaboration between the central bank and the fiscal authority is crucial in addressing the root causes of inflation and implementing appropriate policies to mitigate its impact on the economy.
While the decision to raise interest rates may have implications for borrowing costs, it is intended to strike a balance between managing inflation and supporting economic growth.
The CBN recognizes the importance of maintaining price stability while also creating an environment conducive to investment and economic development.