The Central Bank of Nigeria (CBN) has raised the Monetary Policy Rate (MPR) to 13.5 per cent, in a bid to mop up excess liquidity ahead of the 2023 general elections.
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria on Tuesday, May 24, 2022, concluded its two-day meeting which was the third in the year.
The Committee at the end of the meeting elected to hike the Monetary Policy Rate (MPR) and retain other policy parameters the benchmark interest rate (MPR) which is the benchmark interest rate was raised by 150 basis points (bps) to 13.00 per cent from 11.50 per cent.
It left the asymmetric corridor at +100/-700 bps around the MPR; retained the cash reserve ratio at 27.50per cent and the Liquidity Ratio retained at 30.00 per cent.
The decision of the committee according to the Chief Executive Officer Centre for the Promotion of Private Enterprise [CPPE], Dr Muda Yusuf will raise cost of funds for Small and Medium-scale Enterprises borrowers, impact their operating costs, prices of their products and profit margins.
According to him, though there would be some adverse effects on the equities market, investors in the fixed income instruments may benefit from the hike.