The CBN boosts interest rates to 14% for the second time in 2022.
The governor of the apex bank said the hike in interest rate would help tame rising inflation.
The Central Bank of Nigeria, CBN, increased the monetary policy rate (MPR), which measures interest rates, from 13% to 14%.
The monetary policy rate (MPR) is the baseline interest rate in an economy, upon which all other interest rates are based.
The new interest rate comes just two months after the top bank boosted the rate to 13%.
Godwin Emefiele, governor of the Central Bank of Nigeria, told journalists following the committee’s meeting on Tuesday, July 19, 2022, at the CBN headquarters in Abuja, that the interest rate rise will assist contain increasing inflation.
The committee also increased MPR from 11.5 percent to 13% at its most recent meeting in May due to increases in fuel and food prices.
According to Emefiele, the committee members opted to raise the rate by 100 basis points while maintaining the asymmetric corridor at +100 and -700 basis points around the MPR and the liquidity ratio at 30%.
In response to the first interest rate rise, research by Analysts Data Services Resources (ADSR) stated that the CBN’s move to boost interest rates was unlikely to bring the country’s high inflation rate under control.
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According to the ADSR’s monthly report for June, the MPR increase was expected to follow the trend of hiking rates in major economies throughout the world.
It was stated that most central banks are raising policy rates to combat growing inflation induced by increases in global commodity prices and consumer expenditure.
However, according to the analysis, rate hikes have the greatest influence on inflation when done in fast succession.
As a result, the CBN may be on pace to hike interest rates again, just two months after the first.