CBN Moves to Tame Inflation, Ups Interest Rate to 14 Per Cent

In a strong bid to tame inflation, the Central Bank of Nigeria (CBN) on Tuesday raised the Monetary Policy Rate (MPR), otherwise known as interest rate, by 200 basis points to 14 percent from 12 percent.

It also assured Nigerians of the stability of the banking sector, saying whilst it was poised to deal ruthlessly with any misdemeanour and malpractice, the recent removal of some banks chiefs was not a sign of distress.

The apex bank spoke at the end of its two-day Monetary Policy Committee meeting in Abuja, indicating that while it moved up the interest rate, it left Cash Reserve Ratio (CRR) and Liquidity Ratio (LR) unchanged at 22.50 per cent and 30 per cent respectively as well as retained the Asymmetric Window at +200 and -500 basis points around the MPR.

The MPR is the rate at which the apex bank lend to commercial banks and usually determines the cost of funds in the banking system.
Addressing journalists at the end of the meeting, the CBN Governor, Godwin Emefiele, said five members voted to raise the MPR while three others voted to retain the rate at 12 percent.

The hike in interest rate came on the day the Naira hit N310.07 to the US Dollar even as the World Bank raised some hope of a brighter year, raising its oil price forecast for 2016 to $43 per barrel.

The governor, who admitted the difficulty among members in arriving at a decision over the MPR said it eventually settled for a hike given that the apex bank “lacked the instruments required to directly jumpstart growth, and being mindful not to calibrate its instruments in such a manner as to undermine its primary mandate and financial system stability, in assessment of the relevant issues.”

He added that currently the balance of risks remained tilted against price stability.
Emefiele further explained that the committee had considered the high inflationary trend which has culminated into negative real interest rates in the economy, a condition which according to him discouraged savings.

He added that the negative real interest rates did not support the recent flexible foreign exchange market as foreign investors attitude had remained lukewarm, showing unwillingness in bringing in new capital under the circumstances.

Notwithstanding the hike in MPR, the CBN Governor said the bank would continue to make targeted interventions in agriculture, mineral resources and new manufacturing, adding that it was committed to boost the economy through the Anchor-Borrower programme which has recorded significant success in local rice and wheat production.

The governor noted that the weak macroeconomic environment, as reflected particularly in increasing inflationary pressure...<<<read more by clicking the link below>>>http://www.forexpot.com/cbn/cbn-hike-interest-rate/

And so foolish IPAD will say APC are not working

CBN does this, Federal Government does that and Naira keeps failing like Olympus...We are becoming tired sef

Hmmn...Emifiele refused to highlight the disadvantages of the new policy....o ga o. Educated youth se na like this we go dey dey

NIGERIA MATTER NA ONLY GOD GET THE SOLUTION OUR LEADERS DONT CARE ABOUT US

The trouble with the Naira cannot be solved by hiking interest rate, if anything, it may worsen it. With increased rate, companies will pay more for borrowed funds and prices will increase as a result.
The trouble with the Naira will be solved by diversifying the economy away from oil dependency and by Nigerian buying less of imported items. As long as the demand pressure for the dollar continues, the Naira is headed to extinction, I have said it over and over. The government should slam import restrictions on anything produced and producible in Nigeria

I said it, now the rate has crashed to N334 to the dollar at the interbank