CBN governor Yemi Cardoso disclosed the decision of the meeting, the first since his announcement as the apex bank governor.

He said the move was in a bit to tame the stubborn inflation that had not responded much to the previous marginal increase.

The CBN governor said the committee raised the MPR by 400 basis points to 22.75 percent, and adjusted the asymmetric corridor at +100 and -700 basis points from +100 basis points and -300 basis points around the MPR.

He said the committee also increased the cash reserve ratio (CRR) from 32.5 percent to 45 percent, while retaining the liquidity rate at 30 percent.

On inflation, he said the rate of change in prices of goods and services rose to 29.9 percent in January 2024, from 28.92 percent in December 2023

He attributed the hike in inflation to rising costs of energy, high fiscal deficits and insecurity.

Omooba77:
The Monetary Policy Committee of the Central Bank of Nigeria has increased the benchmark interest rate by 400 basis points to a record 22.75%.

This development is coming barely 24 hours after some financial analysts predicted an increase in the rate at the end of Tuesday’s meeting.

The analysts also projected the MPC to make major decisions on banks’ capital requirements and liquidity ratios.


Analysts predict MPC to raise rates amid high inflation
CBN asks Customs to use forex rate for import duty
A few days after the National Assembly screened and approved new members of the MPC, it started a two-day meeting on Monday.

The meeting is expected to be held from Monday till Tuesday.

Details later…

https://punchng.com/just-in-cbn-raises-interest-rate-to-22-75/

grandstar:


I pray it hits 30%.This will slow inflation down and make the Naira appreciate.

Truths9ja:
during GEJ, it wasn’t increased to this level now 😳😳😳

Victory662:
Somebody should explain this to me oo. I'm a lay man on this particular issue. How will this help our depreciating naira?

grandstar:


I pray it hits 30%.This will slow inflation down and make the Naira appreciate.

grandstar:


I pray it hits 30%.This will slow inflation down and make the Naira appreciate.

Goodlady:
What's the benefit?

grandstar:


I pray it hits 30%.This will slow inflation down and make the Naira appreciate.

Newton1045:
Kpom

Bevista:
Fairly bold move by CBN.
---
The interest rate was too low compared to inflation resulting in a negative yield on bonds. Government cannot be borrowing at such a low rate while causing huge inflation on the masses. It encourages financial rascality.
---
The negative yield was partly why many investors preferred to preserve their funds in USD resulting in the significant depreciation of the naira.
---
Let's hope the fiscal side (Wale Edun & Co) begin to act responsibly.

DeLaRue:
It is a double edge sword.

As CBN rate rises, commercial banks will increase savings/fixed deposit rates, thereby attracting more savers who will be locked into 12 months or more term.

This will indirectly reduce the money available for spending and thus reduce patronage of many goods. As traders and manufacturers wait to exploit consumers with predatory prices, less and less people will buy their goods. As their warehouses pile up with unsold goods, they'll have to reduce prices, thus helping to reduce inflation.

Increasing interest rate will also mean the government can issue bonds at rates that will be attractive to foreign investors. More dollars will flow into the country.

The bad news is:

As Cbn increases interest rate, banks too will increase there lending rate with the likely result that:

1. More businesses that depend on bank loans will lay off staff or even close down

2. There will be fewer new investments- businesses can't survive on 33% - 35% loan rate

3. More pain for the economy generally.

Unfortunately, with the amount of money printed by Mr Buhari's government, the CBN will have to keep increasing interest rate in order to mop up excess liquidity and control inflation.

Managing a large economy in times of crises is a sophisticated game of chess. For every positive steps, there are multiple potential negative consequences. There are usually no easy solutions.

Unfortunately for politicians, the public want solutions NOW or they dabaru everything and even call for coup

The public is not interested in, nor do they understand economic theories.

Bevista:
Fairly bold move by CBN.
---
The interest rate was too low compared to inflation resulting in a negative yield on bonds. Government cannot be borrowing at such a low rate while causing huge inflation on the masses. It encourages financial rascality.
---
The negative yield was partly why many investors preferred to preserve their funds in USD resulting in the significant depreciation of the naira.
---
Let's hope the fiscal side (Wale Edun & Co) begin to act responsibly.