The Central Bank of Nigeria on Tuesday raised the interest rate to 13 per cent for the first time in two years.
The interest rate was raised from 11.5 per cent to 13.5 per cent.
The CBN Governor, Godwin Emefiele, announced this on Tuesday while addressing the reporters after the Monetary Policy Committee meeting in Abuja.
Justifying the raise, Emefiele said the MPC is suspicious there might be an aggressive accretion of inflation.
To prevent the looming inflation, he said, the MPC had to increase the monetary policy rate by 150 basis points.
Meanwhile, the nation’s apex bank retained the asymmetric corridor around the MPR at +100 /-700 basis points, Cash Reserve Ratio at 27.4 per cent, and Liquidity Ratio at 30 percent.
“Six members voted to raise the MPR by 150 basis points, four members’ by 100 basis points and one member, by 50 basis points.
“Members expressed deep concern about the continued uptrend of inflationary pressure in spite the gradual improvement in output growth.
“Committee notes that the current rise in inflation is inimical to growth and the full recovery of the Nigerian economy,’’ Emefiele said.
He added, “After carefully reviewing developments in the two months, and outlook of growth in the domestic and global economy as well as downsides of each policy.
“It is clear and compelling that tackling inflation is more urgent in sequence of policy objectives. MPC urged the CBN to double its effort at supporting the priority growth-enhancing sectors of the economy.
“It urged the Federal Government to do more to provide a safe and secure environment for economic activities to stimulate growth.’’