CBN Raises Interest Rate To 30%

By Tolulope Oke

The Central Bank of Nigeria (CBN) raised the stipulated minimal interest rate due on local currency savings deposits to 30% of the Monetary Policy Rate (MPR).

The apex bank, in a letter addressed to all banks and titled, “Review of Interest Rate on Savings Deposits”, which was dated August 15, 2022 and signed CBN Director, Banking Supervision Department, Mr. Haruna Mustafa, stated that it became necessary to review the rate back to 30 per cent of MPR following the return of normalcy in the economy and considering the prevailing macroeconomic conditions.

The CBN stated that the new circular would go into effect on August 1, 2022, and that it would replace any prior correspondence on the issue.

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However, the CBN noted with satisfaction the declining trends in market rates in the banking sector following the implementation of policies aimed at stimulating credit flows to the real sector, among other things, when it announced the reduction of the minimum interest rate payable on local currency savings deposits to 10% of MPR last year.

As a result, the apex bank reviewed interest payable on savings deposits as provided in its Guide to Charges by Banks, Other Financial and Non-Financial Institutions issued in December 2019.

Consequently, the interest rate on local currency savings deposits was reduced to 10 per cent of MPR.