CBN Matches Inflation Spike With MPC Rate Hike to 15.5%
By Sahabi Abdul
The Central Bank of Nigeria’s Monetary Policy Committee tried to match the surge in inflation rate in August with an equally big increase in its benchmark interest rate to 15.5% at its latest meeting in Abuja.
The MPC rate is at the highest since 2006 when it was introduced to replace the old minimum rediscount rate. The 150 basis points increase is the highest of the consecutive increases in rates made at the committee’s last three sittings.
August inflation numbers released on September 15 showed that the composite price index accelerated to 20.52 percent, the highest in almost two decades.
Central bank Governor Godwin Emefiele at the last meeting indicated the MPC would push for higher borrowing costs to rein in inflation if it didn’t retreat.
Nigeria’s economy, like that of many countries, has felt the impact of the war in Ukraine in higher prices for fuel and food. While fuel costs have jumped due to higher crude oil prices, food costs have risen due to disruptions in the shipment of grains such as wheat, of which both Ukraine and Russia are major producers.