Central Bank of Nigeria raises interest rate, threatens to penalize defaulting Banks
Written by Olarotimi Oshin on September 28, 2022
The Central Bank of Nigeria (CBN) yesterday hiked its Monetary Policy Rate (MPR) to 15.5 percent, the highest ever in 20years.
The increase came at the end of its Monetary Policy Committee (MPC) meeting, which started on Monday in Abuja.
CBN Governor Godwin Emefiele, who announced the new rate, said it was, among others, intended to cause restriction in inflation, which now stands at 20.52 percent.
Members of the MPC also agreed at the meeting to raise the Monetary Policy Rate (MPR) to 15.5 percent; retain the asymmetric corridor at +100/-700 basis points around the MPR; increase the Cash Reserve Ratio (CRR) to a minimum of 32.5 percent, and retain the Liquidity Ratio at 30 percent.
With this latest development, the cost of borrowing will go up to reflect the new MPR of and the minimum cash reserve that banks will keep with the CBN as liquidity will jump to32.5 percent of their total deposits, as against the previous rate of 27.5 percent.
Emefiele also threatened that banks that fail to voluntarily fund their accounts before close of business today to match the new CRR of 32.5 percent would be penalised.
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