CBN Increases Interest Rate for Access Bank, GTB, Others to Transact With Customers

• The Monetary Policy Committee (MPC) has increased the interest rate by 400 basis points to 22.75% from 18.75%
• The CBN governor said that the new rate reflects the government's effort to tame Nigeria's rising inflation
• A financial analyst told Legit.ng that the move will have significant consequences across the financial markets

Legit.ng journalist Zainab Iwayemi has over three years of experience covering the Economy, Technology, and Capital Market.

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has increased the Monetary Policy Rate (MPR) from 18.75% to 22.75%, a four hundred basis points increase.

CBN Governor Yemi Cardoso announced this following this week's first MPC meeting of the year in Abuja.

Hike necessary to tame inflation

The CBN governor said that the new MPR is a component of efforts to combat the nation's 29.90% inflation rate.

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He added that the liquidity ratio remained at 30% but that the Cash Reserve Ratio (CRR) had been increased to 45%.

Analysts said that the move by the CBN will see the different markets react across financial institutions.

According to Charles Abuede, a financial analyst, investors will start prowling for higher returns in this period.

Hence, investment banking firms or financial services providers will do their risk analysis and impact assessment.

He stated:

“Fixed income Securities (CPs) will likely see repricing for the yields.

“Capital raising for corporates may likely see some setbacks due to the current interest rates. So, it's the wrong time to raise capital."

In addition, Abuede believes that the development could lead to increased NPLs for banks as many borrowers will likely default while others will find a way to restructure their books.

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He also said the "equities market will bleed more in days to come in reaction to the rate hike."

Cardoso speaks on Binance

Additionally, the CBN's chief stated in a video by Channels TV that in the previous year, approximately $26 billion had gone through the cryptocurrency app Binance Nigeria.

He said:

"In the case of Binance, in the last one year, 26 billion dollars has passed through Binance Nigeria from sources and users who we cannot adequately identify.”

Recall that Legit.ng reported that the Nigerian Communications Commission (NCC) ordered telecom companies to restrict access to Binance and other cryptocurrency companies' websites.

This came after the Nigerian government contemplated blocking the online platforms of Binance and other cryptocurrency companies to prevent alleged manipulation of the foreign exchange market and illicit financial transfers.

Senate confirms Cardoso, other MPC members

Legit.ng reported that the Senate approved Olayemi Cardoso on Thursday, February 22, as the governor of the Central Bank of Nigeria to lead the MPC.

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Inflation rate, forex crisis, MPR, other matters CBN's MPC will address this week

Recall that as part of an ongoing reorganisation, Nigeria's central bank intended to replace the external members of its monetary policy committee.

The Senate approved the appointment of deputy governors of the CBN, the CBN director, the SEC DG, and others as members of the MPC to work with the CBN governor.

Source: Legit.ng