The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), yesterday increased the base interest rate by 400 basis points to 22.75 per cent.
A major fallout from the MPC decision is that the measure has further increased the cost of borrowing from the Deposit Money Banks (DMBs).
By implication, customers and borrowers seeking loans from commercial banks and other lenders will pay more to secure the required facility.
The MPC said the decision to hike the interest rate was taken to combat inflation and stabilise the foreign exchange market.
The MPC, led by CBN Governor Mr. Yemi Cardoso, made the key decision yesterday.
The rationale behind the decisions, the CBN Governor said, is a result of the MPC’s commitment to tame inflation which has been persistently rising.
He acknowledged the trade-off between economic growth and inflation control, but stated that “long-term growth is only possible in a stable environment with low inflation”.
Going forward, Cardoso said the CBN has acknowledged the importance of working with the government to address non-monetary factors contributing to inflation, such as “insecurity and infrastructural deficits”.
