CBN Raises Interest Rate to 16.5%, Highest In 21 Years

The benchmark interest rate (MPR) was increased by 100 basis points to 16.5%, the highest level since 2001, by the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN).

This was revealed on Tuesday, November 22, 2022, by CBN Governor Godwin Emefiele while delivering the communiqué after the final MPC meeting of the year.

Recall that the MPR was raised by the apex bank from 11.5% to 15.5% over three consecutive rate increases earlier this year. The money supply in Nigeria reached its greatest level of N50.5 trillion at the end of October 2022, up N1.26 trillion from the previous month, according to Nairametrics.

Despite the CBN’s recent hawkish stance, Nigeria’s inflation rate increased to 21.09% in October 2022 from the 20.77% reported the previous month, indicating a significant increase in the cost of goods and services.

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The MPC noted that the tightening will help restore investors’ confidence whilst curbing higher rate of inflation.

The asymmetric corridor of +100/-700 basis points around the MPR was retained. CRR was retained at 32.5%, while the Liquidity Ratio was also kept at 30%