CBN retains benchmark interest rate at 14 per cent
The MPC has kept interest rate at 14 per cent since July 2016 due to inflationary pressures.
The Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC) has once again voted to retain the monetary policy rate (MPR) and other key variables. The Committee held its first meeting in 2019 on January 21-22, where it unanimously voted to hold its benchmark interest rate at 14 per cent.
The MPC has kept interest rate at 14 per cent since July 2016 due to inflationary pressures. Godwin Emefiele, Governor of the CBN, said at the end of the Committee’s meeting that it also retained cash reserve ratio (CRR) at 22.50 per cent and liquidity ratio (LR) at 30 per cent.
Last week, Bloomberg analysts had predicted that key central banks in Africa would hold benchmark interest rates at their first meetings of the year. The countries they mentioned include Angola, Ghana, Kenya, Nigeria and South Africa.
Bloomberg had projected the CBN would retain the MPR in view of the general elections in February, an event that could lead to an uptick in spending and price-growth risks. It also said inflation could accelerate as the Nigerian government deregulates the fuel industry and introduces a minimum wage. The inflation rate rose to 11.44 per cent in December 2018, reaching a 7-month high, and well above the apex bank’s target of 6.0%–9.0%.
“The central bank may raise its rate later this year,” said Omotola Abimbola, an analyst at Ecobank Transnational Incorporated. “The central bank will also do what it can to protect the naira.”
MPR is the interest rate at which the CBN lends to the commercial banks. It is, therefore, the benchmark against which other lending rates in the economy are pegged.
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