CBN Increases Interest Rate In First MPC Session Under President Tinubu

CBN has increased interest rate in first MPC session under President Tinubu.

Newsone reports that Central Bank of Nigeria, CBN Monetary Policy Committee has moderately hiked monetary policy rates to 18.75 per cent.

This online news platform understands that the acting Governor of the Central Bank of Nigeria (CBN), Folashodun Shonubi, disclosed this on Tuesday, July 25, 2023, at the press briefing at the end of the 292nd MPC meeting, the first under President Bola Ahmed Tinubu.

He said, “In summary, the MPR voted to raise the policy rate by 25 basis points from 18.5 to 18.75 per cent.”

Addressing journalists at the end of the two-day meeting in Abuja, Mr. Shonubi said the committee voted to adjust the asymmetric corridor at +100 and -300 basis points around the MPR.

Newsone Nigeria recalls that the Central Bank of Nigeria (CBN), in its last MPC meeting, tightened the economy by raising the interest rate to 18.5 per cent.

Interest rate: Money supply surged despite contractionary measure 

Nigeria’s money supply increased by a whopping N8.8 trillion in June 2023 to N64.3 trillion from N55.5 trillion recorded as of the previous month. This is the highest level on record according to data from the CBN. 

• The significant rise was despite contractionary measures adopted by the CBN to tighten the level of liquidity in the country. However, money supply and currency in circulation have continued to spike significantly.  
• Specifically, currency in circulation rose N2.6 trillion In June from N2.5 trillion in the previous month, while currency outside banks’ vault increased to N2.26 trillion from N2.18 trillion as of the prior month. 
• In the same vein, credit to the government increased to N31.2 trillion from N30.7 trillion, while credit to the private sector surged to N52.8 trillion from N44.8 trillion recorded in May 2023. 

• The surge in money liquidity and inflationary pressure in the country despite the hawkish move of the CBN, indicates that raising interest rates alone is not enough to tighten liquidity and clamp down on inflation.