The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has for the second time in three months increased official interest rate by 250 basis point.
The committee increased the Monetary Interest Rate (MPR) by 150 basis point in May 2022 – from 11.5 per cent to 13 per cent.
At the end of its July meeting on Tuesday, the MPC again announced further tightening of the rates by 100 basis points – 14 per cent from 13 per cent in May.
The apex bank had held the official interest rate at 11.5 per cent to pursue a place of price stability that is conducive to growth.
As regard the decision to tighten, loosening or hold, the MPC members were unanimous and so did not consider both loosening and retaining rates at existing levels.
The MPC believes that loosening will worsen the existing liquidity condition in the country and further dampen money market rates.
However, the MPC retained other monetary parameters constant around the MPR. That implies that the apex bank retained held the asymmetric corridor of +100/-700 basis points was also retained, same for the Cash Reserve Ratio at 27.5 per cent, while Liquidity Ratio was also kept at 30 per cent.
The bank also urged the federal government to curb insecurity to enable farming activities to return across the country and help to reduce the inflationary pressure from the supply side of the chain.
MPC called on the government to seek a viable ways to address the pricing issue of petroleum products to deal with the issue of fuel scarcity.