The Monetary Policy Rate (MPR), which measures interest rates, was increased by the Central Bank of Nigeria to 15.5 percent from 14 percent.
Following a meeting of the Monetary Policy Committee in Abuja on Tuesday, September 27, CBN Governor Godwin Emefiele announced this. He claimed the action was taken to reduce inflation.
The committee unanimously decided to enhance the MPR, Emefiele remarked.
The MPC voted to keep the asymmetric corridor around the MPR at +100 -700 basis points while increasing the MPR to 15. Maintain the liquidity ratio at 30% while raising the Cash Reserve Ratio (CRR) to a minimum of 32.5%.
The significance of the growing gap between the present policy rate of 14 percent and the inflation rate of 20.52 percent was discussed by the members.
“At this meeting, the option of reducing the policy rate was not considered as this would be gravely detrimental to reigning in inflation. The committee thus agreed unanimously to raise the policy rate to narrow the interest rate gap and reign in inflation. The committee thus voted unanimously to raise the MPR.
“10 members voted to raise the MPR by 150 basis points, one (voted to raise it) by 100 basis points and one by 50 basis points. 10 members voted to increase CRR (Cash Reserve Ratio) by 500 basis points, while two members voted to increase it by 750 basis points.”
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