CBN hikes interest rate to 22.75%

By Matthew Denis, Abuja

The Central Bank of Nigeria (CBN) has raised the monetary policy rate by 400 basis points to a record 22.75 per cent from 18.5 per cent.

The CBN held its inaugural Monetary Policy Committee (MPC) meeting yesterday and today.

The outcome of the two-day meeting in Abuja resulted in the increase in the interest rate.

The committee also increased the Credit Reserve Ratio (CRR) to 45.0 per cent from  32.5 percent; and retain liquidity rate at 30 per cent.

Speaking, the CBN Governor, Olayemi Cardoso said the increase of the anchor rate was to moderate the country’s soaring inflation rate, which stood at 29.90 per cent in January.

The decision of the MPC also coincided with the announcement by the CBN of the sale of foreign exchange to Bureau de Change (BDC) operators in the country at N1,301 per USD, according to a Tuesday memo signed by Hassan Mahmud, the director of the Trade and Exchange Department at the apex bank.

The resumption of the sale of forex to BDCs is happening more than two years after the former CBN governor, Godwin Emefiele, stopped the sales to BDC operators in that segment of the forex market.

According to the memo, the move is part of CBN’s “strategic step” to increase liquidity and strengthen the naira against “manipulators”.

The last time the MPC raised interest rates was in July under the former acting governor, Fola Shonubi and  Cardoso in its maiden MPC tightened the monetary policy measures.