The Central Bank of Nigeria has raised the monetary policy rate from 14% to 15.5%, the most aggressive in more than 10 years.
The Governor of the Bank, Mr Godwin Emefiele who announced the hike on Tuesday at the monetary policy committee in Abuja, said the decision was in tandem with the inflationary pressure which now stands at 20.52%.
He hinted that the Apex bank might continue to raise rates to minimize the impact of capital flight out of the country.
Mr Emefiele said indicators show that inflation might continue in the same pattern over the next few months due to election related spending, insecurity and weak infrastructure.
Commercial banks have been directed to transfer 32.5% of their reserves to the CBN as complementary measure to moderate liquidity in the system and help to slow the inflationary trend, he said, adding that banks that violates the directive will be sanctioned in the foreign exchange market.
The committee expressed concern about the bank’s interventions which has risen to about N9trn in the last three years and its impact on inflation.
Reporting by Biodun Dare, editing by Saadatu Albashir