By Onome Amuge.
The monetary policy committee (MPC) of the Central Bank of Nigeria (CBN) has in its July 2023 meeting, raised the monetary policy rate (MPR), for the eight consecutive period since May 2022, by 25 basis points from 18.5 per cent to 18.75 per cent.
The monetary policy rate (MPR) is the baseline interest rate in an economy, intent on cushioning the effects of the country’s inflation rate and restoring investor sentiment.
Folashodun Shonubi, the acting CBN governor made the disclosure at a press briefing following the end of the monetary policy committee meeting held on Tuesday, 25 July 2023 ,at the CBN headquarters in Abuja.
According to the acting CBN governor, the decision was reached after six of the eleven members of the committee in attendance voted to raise the MPR, while five voted to hold rates. He explained that the committee decided to reduce the asymmetric corridor at 100-300 from +100 to -700 basis points around the MPR to arrive at 18.75 per cent.
Business A.M understands that this is the first monetary policy committee meeting since the suspension of Godwin Emefiele as CBN governor. However, the apex bank, despite some modifications in Emefiele’s monetary policies, towed a similar hawkish stance by increasing the interest rate for the eight consecutive period.
The committee had in May 2022, and for the first time since September 2020, increased MPR by 150 basis points from 11.5 per cent to 13 per cent. In its following meeting in July 2022, the MPC raised the MPR by 100 basis points to 14 per cent. The July increase represented the second consecutive hike in the MPR within two months.
An aggressive move to fight the surging inflation saw the CBN raise the MPR to 15.5 per cent in September 2022. The benchmark interest rate was further increased by 100 basic points to 16.5 per cent in November 2022, its highest level since 2001.
Further hike was also seen in January 2023 when the MPR was raised from 16.5 per cent to 17.5 per cent. Further increases were seen in March when it was raised to 18.0 per cent.
At the last MPC meeting headed by Emefiele, the rates were increased to 18.5 per cent from 18.0 per cent. He cited the gains of previous high rates as reason for the increase, noting that it was aimed at keeping inflation rate under control.
However, Nigeria’s inflation rate has continued to surge, as it rose 22.79 per cent in June 2023 amid a 25.25 per cent month-on-month hike in food prices.