BREAKING: CBN increases interest rate to 16.50% 

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) on Tuesday raised its interest rate or Monetary Policy Rate further by 100 basis points to 16.50per cent from 15.50 per cent with other policy parameters unchanged.

At the just concluded meeting, a total of nine members voted for a 100 basis points hike in rates and two voted for a 50 basis points raise.

MPR is the interest rate at which CBN lends to commercial banks. The MPR is the benchmark against which other lending rates in the economy are pegged and is usually used as an instrument to moderate inflation in the economy.

At the 6th and last MPC meeting for 2022, the Committee unanimously voted to retain Cash Reserve Ratio (CRR) at 27.50 per cent and liquidity ratio at 30 per cent. 

Analysts at Investment Research in a statement said the decision to raise rates further remained hinged on the increasing inflationary pressures and the need to buckle down efforts in achieving the mandate of price stability.

“Taking a loosening or hold stance was not considered by the committee as this would jeopardise the gains of the contractionary policy moves taken in the past three meetings, as the pace of month-on-month increase in inflation has declined for the third consecutive month.

“In our opinion, this is unsurprising given the hawkish guidance of the CBN governor at the last meeting and the continued uptick in inflation. However, we reiterate our position that inflation drivers remain largely tilted to the supply-side and existing structural legacies.

“Thus, further increases in the MPR should have no significant effect in bulwarking inflationary pressures in the short to medium term,” analysts said.