The Central Bank of Nigeria (CBN) has raised its benchmark interest rate by 25 basis points to 18.75% in an effort to curb inflation.
The CBN’s Monetary Policy Committee (MPC) voted to increase the rate at its meeting on Tuesday, citing concerns about rising inflation. Inflation in Nigeria rose to 17.75% in May, the highest level in 18 months.
The CBN said the increase in the interest rate would help to reduce the growth of money supply and make it more expensive for businesses to borrow money. This, in turn, should help to slow down inflation.
The CBN’s decision to raise interest rates is a reversal of its previous policy of easing monetary policy. In 2021, the CBN cut the interest rate four times in an effort to stimulate economic growth.
However, the CBN has since become more concerned about the rising inflation rate. The bank has said that it will continue to monitor inflation and adjust its monetary policy as needed.
President Bola Ahmed Tinubu has previously supported an interest rates reduction. He said that lower interest rates would help to boost investment and economic growth.
The CBN’s decision to raise interest rates is likely to be met with mixed reactions. Some businesses may welcome the move, as it will make it more expensive for their competitors to borrow money. However, other businesses may be concerned that the higher interest rates will make it more difficult for them to finance their operations.
The CBN’s decision to raise interest rates is a sign that the bank is serious about tackling inflation. However, it remains to be seen whether the move will be enough to bring inflation under control.