The Central Bank of Nigeria (CBN) has raised the interest rate in the country to 13 per cent, showing an increase of 1.5 per cent.
The interest rate had been at 11.5 per cent initially before the hike by the apex bank on Tuesday.
The bank’s governor, Godwin Emefiele, who announced this in Abuja on Tuesday at a news conference, said the move was to halt the rising inflation in the country.
When interest rates are rising, both businesses and consumers will cut back on spending. This will cause earnings to fall and stock prices to drop. A rising interest rate will halt borrowing.
Emefiele said the Monetary Policy Committee (MPC) took the decision because it suspected that there might be an aggressive accretion of inflation, which needed to be halted.
According to him, to prevent the looming inflation, the MPC had to increase the monetary policy rate by 150 basis points above the previous rate.
Nigeria’s inflation currently stands at 16.82 per cent in April, recording the highest jump in eight months, according to the National Bureau of Statistics (NBS).
The consumer price index, which measures the rate of increase in the price of goods and services, jumped amid increases recorded in food and energy prices.
The NBS said on Monday that the rate is 1.3 per cent points lower compared to 18.12 per cent recorded in April 2021.
However, the new annual rate is the highest since September 2021 (16.63 per cent).
