The governor of the Central Bank of Nigeria, Godwin Emefiele has said that the Monetary Policy Committee (MPC) of the bank will further raise the interest rate in months to come.
Emefiele said the increase in interest rate was to rein the inflation rate which hit 22.22 per cent in April 2023.
He stated this on Wednesday after the MPC meeting held at the CBN Headquarters in Abuja.
When asked if the CBN will continue to raise the MPR as long as the inflation trend goes up further, Emefiele said: “I have said so. I am not going to give anybody any assurance that we are not going to do what we are doing, because we are seeing the result of what we are doing.
“We have also seen the impact of MPR hikes on the headline inflation,” he added.
The CBN chief went ahead to state that the rate was having an expected impact on credit, even though the MPC was not excited that credit was dropping, but it was necessary to reduce inflation.
“Around May 2022, credit was about N1.4 trillion, but as we speak today, credit is about N600 billion. When you raise rate, you are trying to constrain credit.
“We are seeing it happen. And I must confess here that we are not happy that the hike in rate is constraining credit, but we have to do our work because inflation is at the heart of what we are saying we want to deal with.
“Because if you don’t raise rate to constrain credit, what that would mean is that it would create more inflationary pressure and create more problems for us,” Emefiele explained
While Emefiele said he can’t promise that the CBN won’t raise the rate again if inflation continues its upward trend, the apex bank chief disclosed that the response of the financial regulator will not be aggressive.
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