The Central Bank of Nigeria (CBN) yesterday hiked its Monetary Policy Rate (MPR) to 15.5 percent, the highest ever in 20 years.
The increase came at the end of its Monetary Policy Committee meeting, which started on Monday in Abuja.
CBN Governor Godwin Emefiele, who announced the new rate, said it was, among others, intended to rein in inflation, which now stands at 20.52 percent.
Members of the MPC also agreed at the meeting to raise the Monetary Policy Rate (MPR) to 15.5 percent; retain the asymmetric corridor at +100/-700 basis points around the MPR; increase the Cash Reserve Ratio (CRR) to a minimum of 32.5 percent, and retain the Liquidity Ratio at 30.0 percent.
Part of the implications of the measures is that the cost of borrowing will go up to reflect the new MPR of 15.5 percent and the minimum cash reserve that banks will keep with the CBN as liquidity will jump to 32.5 percent of their total deposits, as against the previous rate of 27.5 percent.
Emefiele also threatened that banks that fail to voluntarily fund their accounts by tomorrow to match the new CRR of 32.5 percent would be penalised.
The measures have, however, met with varied reactions.
The implication of the measures is the fear that raising the MPR will directly impact the fortunes of the manufacturing sector. The direct fallouts of the measures, among others, are loss of jobs and non -recruitment of additional workforce. Nation
