SmartPreneur
Advertisement
  • Home
  • Trending News
  • Brand Insights
  • Profiles
  • Hustle Life
  • Weekend Teaser
  • Radio
  • TV
  • Games & Quizzes
No Result
View All Result
  • Home
  • Trending News
  • Brand Insights
  • Profiles
  • Hustle Life
  • Weekend Teaser
  • Radio
  • TV
  • Games & Quizzes
No Result
View All Result
SmartPreneur
No Result
View All Result
Home News

CBN raises Benchmark Interest Rate for the second time in 2022 as Inflation surges to 18.6%

Implications for SMEs and individuals

Contributor by Contributor
July 20, 2022
in Business, News, SME
0
CBN raises Benchmark Interest Rate for the second time in 2022 as Inflation surges to 18.6%
0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on Whatsapp

The Central Bank of Nigeria (CBN), during its recent Monetary Policy Committee (MPC) meeting, voted unanimously to raise the benchmark interest rate to 14%, the second such interest rate hike in the year.

Join our communityJoin our communityJoin our community

The committee resolved to increase the MPR by 100 basis points from 13% to 14% following the rising cost of goods and services in the country. The National Bureau of Statistics (NBS) reported last week that Nigeria’s inflation rate rose to 18.6% in June 2022, up from the 17.71% recorded in the previous month.

In the meeting that started on Monday, 18th July 2022 and which lasted for two days, the committee resolved that the most rational policy option would be to further tighten its hawkish stance to effectively curtail the rising trend of inflation in the country.

The hawkish move of the apex bank was deemed necessary following the rising trend of inflation across the globe. Members of the committee were unanimous in deciding that the aggressive increase in inflation and its resultant negative consequences, particularly on the purchasing power of the poor and economic growth, warrants the need to continue to tighten.

The Central Bank had maintained a low interest rate regime since March 2019, when the apex bank reduced the MPR from 14% to 13%. Following that, the rate was reduced further in May 2020 to 12.5% and 11.5% in September 2020 in a bid to encourage more real sector spending amidst the covid-19 pandemic. However, the rising cost of energy across the world and the continuous scarcity of petrol in most Nigerian cities, which together have caused a significant surge in the prices of goods and services, have necessitated a hawkish move from the Central Bank.

 

What the bank is saying

The excerpt from the bank’s communique reads, “the MPC noted with concern the continued aggressive movement in inflation, even after the rate hike at its last meeting, and expressed its unrelenting resolve to restore price stability while providing the necessary support to strengthen the fragile recovery.”

“The MPC noted that the current upsurge in price levels remains a primary concern to monetary policy as Members focused on the optimal policy approach required to address this development while protecting the fragile recovery.”

“Despite the apparent headwinds confronting the economy, the MPC noted that the banking system remained robust given the continued decline in NPLs below the prudential threshold and enjoined the Bank to sustain the trend by maintaining its vigorous surveillance to ensure [the] continued resilience of the banking industry.”

 

Why this matters to SMEs

The monetary policy interest rate, which determines the rate by which banks get loans from the CBN, is used to control the supply of money in the economy and can be raised to combat inflationary pressure. However, this hike in interest rate means that loan seekers will pay a higher interest rate to access credit, which could affect economic growth. 

Small businesses and individuals who seek to access loans could be discouraged by higher interest rates, which could affect the level of business activities in the country. However, it should be noted that the hike in interest rate is a necessary tool to curb the rising prices of commodities and services in the country as opined by the apex bank.

Tags: Monetary policy committee meetingmonetary policy interest rateNational Bureau of StatisticsPolicy optionSMEs
Previous Post

DIY: Build Your Business Website In Short, Simple Steps

Next Post

Rising Star: Profile of Priscilla Ajoke Ojo

Contributor

Contributor

Related Posts

AI-Powered Business: Benefits and Drawbacks
SME

AI-Powered Business: Benefits and Drawbacks

by Blessing Osazuwa
June 8, 2023
0

Artificial Intelligence (AI) is rapidly reshaping our world, and the realm of entrepreneurship is no exception. As AI continues to...

Read more
core competency
SME

How to Identify and Leverage Your Core Competencies for Business Success

by Blessing Osazuwa
June 5, 2023
0

Businesses must leverage core competencies to gain a competitive edge in today's business landscape. Core competencies are the unique skills...

Read more
Top 6 Ways to Foster Creativity in your Business
SME

Top 6 Ways to Foster Creativity in your Business

by Blessing Osazuwa
June 2, 2023
0

Creativity, the driving force behind innovation, growth, and competitive advantage, holds immense significance in today's business landscape. Nurturing and harnessing...

Read more
How to Balance Price Increase, Profitability and Customer Loyalty
SME

How to Balance Price Increase, Profitability and Customer Loyalty

by Blessing Osazuwa
June 2, 2023
0

As an entrepreneur, you are well aware that pricing decisions hold significant influence over the success and profitability of your...

Read more
Staying Afloat in Stormy Seas as an Entrepreneur
SME

Staying Afloat in Stormy Seas as an Entrepreneur

by Blessing Osazuwa
June 1, 2023
0

During times of economic strife, business owners are confronted with uncertainty and face numerous challenges that test their resilience. However,...

Read more
Thinking of Improving your Customer Service Strategy? Ask These 5 Questions
SME

Thinking of Improving your Customer Service Strategy? Ask These 5 Questions

by Blessing Osazuwa
May 31, 2023
0

In the quest to provide exceptional customer service, understanding your audience's needs and expectations is paramount. By directly engaging with...

Read more
8 Tips for Restoring Your Small Business Reputation After a Social Media Call-Out
SME

8 Tips for Restoring Your Small Business Reputation After a Social Media Call-Out

by Blessing Osazuwa
May 26, 2023
0

Social media possess an immense capacity to amplify voices and shape public opinion, making it a formidable force in today's...

Read more
Load More
Next Post
Priscilla Ojo young entrepreneur in business

Rising Star: Profile of Priscilla Ajoke Ojo

Please login to join discussion

Recent News

Online business

Key Factors To Consider When Scaling Your Online Business

June 8, 2023
AI-Powered Business: Benefits and Drawbacks

AI-Powered Business: Benefits and Drawbacks

June 8, 2023
Never Say These 7 Phrases To Your Customers

Never Say These 7 Phrases To Your Customers

June 5, 2023
core competency

How to Identify and Leverage Your Core Competencies for Business Success

June 5, 2023
SmartPreneur

© 2020 SmartPreneur

Navigate Site

  • Home
  • Trending News
  • Radio
  • Games & Quizzes
  • TV

Follow Us

No Result
View All Result
  • Home
  • Trending News
  • Radio
  • TV
  • Hustle Life
  • Brand Insights
  • Profiles
  • Game & Quizzes
  • Weekend Teaser

© 2020 SmartPreneur