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CBN raises interest rate from 11.5% to 13%

THE Monetary Policy Committee of the Central Bank of Nigeria increased benchmark interest to 13%, 150 basis points more than the previous rate. It’s the first time anything has changed since September 2020.

Godwin Emefiele, the Governor of the Central Bank, stated this while reading the MPC’s 142nd meeting statement.

Emefiele stated that the step was taken to combat the country’s growing inflation rate.

The CBN governor, on the other hand, stated that the interest rate on development finance loans will stay at 5% till 2023.

The Federal Reserve’s decision to raise interest rates by 0.5 percentage points earlier this month sent shockwaves around the world, prompting other economies to follow suit.

The Federal Reserve boosted its benchmark interest rate to a target range of 0.75 percent to one percent, the highest increase in 22 years. Following a 0.25 percentage point hike in March, the first since December 2018, the decision was made.

As a result of the US decision, the Bank of England raised interest rates from 0.75 percent to one percent in order to combat rising inflation, which is predicted to exceed 10% in the following months. In addition, the bank cautioned that the cost-of-living crisis could send the country into recession in 2022.

The monetary policy committee (MPC) raised its base rate by a majority vote, bringing borrowing costs to their highest level in 13 years.

Similarly, Gulf governments with dollar-denominated currencies responded to the Fed by raising interest rates.

In addition, Australia’s central bank hiked interest rates for the first time in almost a decade, following the lead of Asia-Pacific economies that have taken action to combat growing inflation. The Reserve Bank of Australia (RBA) increased its benchmark interest rate from 0.1 percent to 0.35 percent.

The Reserve Bank of India (RBI) also increased its repo rate, which is the rate at which it lends money to commercial banks in exchange for securities, by 40 basis points to 4.4 percent. Though the bank had lowered the rate to a record low of 4%, during the Covid-19 outbreak.

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