Monetary Policy Review – MPC Raises Benchmark Rate to 13.00% While Retaining All Other Parameters

The Monetary Policy Committee (MPC) concluded the third meeting for the year on the 24th of May 2022 and decided to increase the benchmark interest rate by 150bps from 11.50% which it has been since September 2020 to 13.00%, while holding all other policy parameters constant.

Source: CBN, Alpha Morgan Research

Specifically, the committee:

  1. Increased the Monetary Policy Rate (MPR) to 13.00%.
  2. Retained the Asymmetric corridor around the MPR at +100/-700bps.
  3. Retained the Cash Reserve Ratio (CRR) at 27.5%.
  4. Retained the Liquidity Ratio (LR) at 30.0

The CBN’s hawkish position is a bid to drive capital flow reversal, as well as the curbing of the substantial rise in inflation which has generated concerns due to rising aggregated demands and rising wages that have put considerable pressure on price levels.