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CBN votes to raise interest rates to 18.5%, highest in 22 years



The Monetary Policy Committee (MPC) of the Central Bank of Nigeria has increased its benchmark interest rate (MPR) for the third time this year by 50 basis points to 18.5% in its recently concluded MPC meeting.

This was revealed by the governor of the CBN, Godwin Emefiele at the post-MPC press briefing held on Wednesday 24th, 2023.

This latest increase marks the 7th consecutive rate hike by the apex bank in its fight against Nigeria’s marauding inflation. The governor of the Central Bank of Nigeria said this at the 226th Monetary Policy Committee meeting in Abuja.

The decision of the CBN is made on the back of the rising inflation rate in the Nigerian economy. Headline inflation rose to 22.22% in April 2023 from 22.04% recorded in the previous month, representing its highest level since September 2005.


CBN’s interest rate at 18.5% represents its highest level in 22 years.

Context: The central bank Governor stated that it has unanimously voted to hike its monetary policy rates or interest rates by 50 basis points, as 10 members voted for a 50 basis point hike and 1 member 25 basis points.

  • The CBN opined reducing MPR was not even considered and that a hold will be counterfactual to evidence on the ground.
  • They also cited evidence that raising rates was reducing inflation which may have risen to as high as 32% as against 22.22% if rates were not aggressively raised in April

Highlights of the Committee’s Decision 

  • Increase MPR by 50 basis points to 18.5%
  • The asymmetric corridor of +100/-700 basis points around the MPR was retained
  • CRR was retained at 32.5%
  • While the Liquidity Ratio was also kept at 30%

Not a surprise

Financial experts and economists had predicted that the CBN’s Monetary Policy Committee (MPC) would raise the benchmark interest rate, known as the Monetary Policy Rate (MPR), due to increasing inflation in the country. They believed that the MPC would take into account the inflationary pressures while also considering growth dynamics.

For example, Afrinvest (West) Africa Limited analysts had conducted a comprehensive analysis of the global and domestic macroeconomic landscape since the last MPC meeting in March.

Based on their assessment, they do not expect the CBN to maintain or reduce the anchor rate. Instead, they project a modest 50 basis points (bps) increase in the MPR to 18.5 percent. This increase is likely to have an impact on market yield and savings rates.


CSL Stockbrokers anticipated a 25 basis point increase in inflation. “We believe the inflation rate at this level still falls below CBN’s expectations, hence we eliminate the possibility of a rate cut. Moreover, the CBN will likely toe the line of its global peers, hence, we anticipate a 25bps increase in the Monetary Policy Rate.”

Why this matter 

Nigeria has been grappling with a high inflation rate as well as a depreciating exchange rate both at the parallel and the official market.

  • Headline inflation rose to its highest level in over 17 years in April 2022, eroding the purchasing power of citizens,
  • The central bank continues to rein in inflation using monetary policy tweaks, by increasing interest rates.
  • Nairametrics predicted a rate hike of 25-50 basis points if the central bank is to slow down the fast pace of inflation

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