The CBN’s Monetary Policy Committee (MPC) on Tuesday increased the Monetary Policy Rate (MPR) from 14 per cent to 15.5 per cent to tame inflation.
The committee had increased the MPR by 250 basis points at its last two meetings.
CBN governor, Godwin Emefiele, announced the new rate after the September bi-monthly MPC meeting in Abuja.
This is the third consecutive hike of the MPR, the benchmark interest rate for the country’s financial market in 2022.
The MPC also raised the cash reserve ratio to 32.5 per cent from 27.5 per cent while holding other parameters constant.
The asymmetric corridor, thus, remains at +100/-700 basis points around the MPR, and the liquidity ratio remains at 30 per cent.
The asymmetric interest rate corridor is a new tool developed to increase the flexibility of monetary policy.
“The MPC noted with concern the continued aggressive movement in inflation, even after the rate hike at its meeting in May and July.
“It expressed its unrelenting resolve to restore price stability while providing the necessary support to strengthen the fragile recovery,” Mr Emefiele said.
Some experts had earlier projected that the CBN would increase the rates to rein in inflation.
Umhe Uwaleke, an economist, had said the MPC would increase the MPR by at least 50 basis points.
Mr Uwaleke, a professor of capital market at Nasarawa State University, said rising inflation informed his projection.
Tope Fasua, another economist, urged the MPC to retain the subsisting rates as past rate increases had not tamed inflation.
“We have raised rates by 250 basis points in the last two meetings, but inflation has surged further.
“This means that our own inflation is not tightly linked with interest rates and may recede in its own time.
“Ours is a bit of a carryover from the COVID-19 era of production shutdown and imported inflation because our economy is dependent on foreign ones battling inflation presently,” he explained.
(NAN)