Mr. Godwin Emefiele, Governor of CBN

Why CBN adjusts interest rate to 30 percent: Official

*The Central Bank of Nigeria explains the recent review becomes necessary in view of the return to full normalcy, as well as the prevailing macroeconomic condition in the economy after the COVID-19 pandemic

Isola Moses | ConsumerConnect

The Central Bank of Nigeria (CBN) has adjusted the interest rate on Savings Deposits to 30 percent of the Monetary Policy Rate (MPR).

ConsumerConnect reports the Bankers’ Bank, in a letter dated August 15, 2022, explained that the latest review had become necessary, following the return to full normalcy and considering the prevailing macroeconomic condition after the scourge of the COVID-19 pandemic.

Signed by Haruna B. Mustafa, Director of Banking Supervision at CBN, the letter said that the policy became effective from August 1, 2022.

Mustafa stated: “The negotiable minimum interest rate on local currency savings deposits shall be 30% of MPR.”

The Director also noted that the letter supersedes the previous letter carrying September 1, 2022, referenced BSD/DIR/GEN/LAB/13/052.

Recall that the CBN had earlier reduced the minimum interest rates payable on local currency savings deposit from 30 percent to 10 percent of the MPR as part of the efforts at cushioning the damaging impact of the COVID-19.

“This was aimed at stimulating growth in the larger economy, following the economic slowdown occasioned by the pandemic,” said the letter.

The Monetary Policy Rate is a base interest rate of the economy, which serves as a benchmark for lending in the financial sector of the economy.

It is a tool which the CBN uses to regulate inflation.

In the same vein, savings deposit rates refer to the interest rates that customers pay for keeping their money in their bank accounts charged by the commercial banks.

The implication of this is that an increase in the interest rate on savings deposits is expectantly to increase savings.

However, when inflation surpasses the rates, the purchasing power of any money saved begins to drop, according to analysts.

Kindly Share This Story