CBN Increases Interest Rate for the Third Time in 2023 to the Highest in the 22 Years.
The Central Bank of Nigeria (CBN) has raised its interest rate for the third time in 2023, reaching the highest level in 22 years, according to a report by GoldenNewsNg. On May 24, 2023, the Monetary Policy Committee (MPC) of the CBN unanimously decided to increase the monetary policy interest rates to 18.5 percent.
During the MPC meeting, CBN Governor Godwin Emefiele announced that the benchmark interest rate had been raised by 50 basis points to 18 percent in March of the same year. Emefiele also disclosed that the committee voted to maintain the asymmetric corridor around the MPR at +100 and -700 basis points.
The CBN justified the increase in inflation by pointing to factors such as high energy costs and challenges in the supply chain, which are beyond the bank’s control. Emefiele stated that the bank would continue to monitor the price developments closely and collaborate with the fiscal authority to address the underlying causes of inflation.
Prior to the MPC meeting, analysts in Nigeria had predicted that the CBN and MPC would raise lending rates. The CBN had already implemented six consecutive rate hikes, raising the MPR from 11.5 percent to 18 percent in March of that year, as reported by Newsone Nigeria.
The decision to raise interest rates by the CBN was driven by the increasing inflation rate in the Nigerian economy. In April 2023, headline inflation reached 22.22 percent, the highest level since September 2005. Therefore, the CBN’s interest rate of 18.5 percent marks its highest level in 22 years.
