CBN Increases Interest Rate for the Third Time in 2023, Highest in 22 Years

CBN has increased its Interest Rate for the third time in 2023, the highest in 22 years.

Newsone reports that the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), on Wednesday, May 24, 2023, unanimously voted to increase its monetary policy interest rates to 18.5 percent.

This online news platform understands that the CBN MPC had in March this year, voted to increase the benchmark interest rate by 50 basis points to 18 percent, the CBN Governor, Godwin Emefiele, disclosed this while reading the communiqué of the third MPC meeting of the year on Wednesday.

Addressing journalists at the end of the two-day meeting in Abuja, Nigeria’s capital, CBN Governor Emefiele, said the committee voted to keep the asymmetric corridor at +100 and -700 basis points around the MPR.

Justifying the rising inflation rate, the Monetary Policy Committee of the CBN blamed the high energy cost and challenges around the supply chain, among others, which are beyond the reach of the CBN.

He added, “The current trend in price development would continue to be monitored by the bank with greater collaboration with fiscal authority to address the drivers of inflation.”

Meanwhile, Newsone Nigeria reports that analysts in the country had predicted the CBN and the MPC might raise the lending rates at the end of the Monetary Policy Committee. The apex bank had increased the MPR from 11.5 percent earlier last year to 18 percent in March this year across six consecutive rate hikes.

The decision of the CBN is made on the back of the rising inflation rate in the Nigerian economy. Headline inflation rose to 22.22% in April 2023 from 22.04% recorded in the previous month, representing its highest level since September 2005. CBN’s interest rate at 18.5% represents its highest level in 22 years.