The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has voted unanimously to raise the Monetary Policy Rate (MPR) to 13 per cent.
CBN Governor, Godwin Emefiele, announced this on Tuesday while briefing reporters at the end of committee’s meeting at the apex bank’s headquarters in Abuja.
It is the first time in two and a half years that the policy-setting committee of the nation’s financial regulator would increase the MPR, which measures the interest rate.
The MPR is the baseline interest rate in an economy while every other interest rate used within such an economy is built on it.
“The sharp rise in inflation across both the advanced and emerging market economies has generated growing concerns among central banks as the progressive rise in inflation driven by rising aggregate demands and wage growth has put sustainable pressure on price levels,” said Emefiele.
“Consequently, the major central banks such as the U.S. Fed, the Bank of England, European Central Bank, and Bank of Canada have provided strong guidance of a progressive shift away from monetary policy accommodation to drive market interest rate which may ultimately impact capital flows away from emerging market economies.”
Emefiele explained that at the 285th meeting of the MPC, six out of the 11 members of the committee voted to raise the key rate.
According to him, the committee also voted to retain the asymmetric corridor at +100 and -700 basis points around the MPR, as well as Cash Reserved Ratio (CRR) at 27 per cent.
The committee, the CBN governor stated, also voted to retain all other parameters. He advised the various banks in the country and the Federal Government to redouble efforts in supporting monetary authority.