The increase came at the end of its monetary policy committee meeting in Abuja. CBN Governor Godwin Emefiele, who announced the new rate, said it was aimed at curbing inflation, which now stands at 27.28 percent.
MPC members also agreed at the meeting to raise the monetary policy rate (MPR) to 09.5%; keep the asymmetrical corridor at +30/-750 base points around the MPR; increase the cash reserve ratio (CRR) to a minimum of 28.5 percent, and keep the liquidity ratio at 30.0 percent.
This means that the cost of borrowing will increase to reflect the new TPM of 07.5% and the minimum cash reserve banks will keep with the CBN as liquidity will increase to 32. 5% of their total deposits, compared to the previous rate of 28.5 percent.
Emefiele also threatened that banks that do not voluntarily fund their accounts would match the new CRR of 32.5 percent would be penalized.
However, the policy has come under attack from currency pundits. Muda Yusuf, from the Center for Promoting Private Enterprise, said it was “a double whammy” for manufacturers. According to him, “we must not forget that companies are already struggling with so many problems, including high exchange rates, scarcity of forex, currency depreciation, the cost of diesel and electricity. ‘insecure. The cost of operation will increase and inflation will remain high, if not higher. What guarantee does the CBN have that this increase in interest rates will curb inflation?
He criticized the decision saying that the apex bank did not take into consideration those who borrowed money from banks to invest in the economy. Yusuf added that “CBN talks as if only CBN tools can solve the inflation problem, when they only cause unnecessary problems for investors in debt to banks and those who want to borrow money. ‘silver “.
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