Mr. Godwin Emefiele, Governor of CBN

MPC raises interest rate to 17.5 percent as CBN restates January 31 deadline for old banknotes

*The Central Bank of Nigeria restates the January 31, 2023, deadline for use of old N200, N500 and N1,000 notes remains, just as the banking sector regulator says the economy is still confronted with the ‘risk of high inflation with adverse consequences’ on consumers’ living standards

Isola Moses | ConsumerConnect

The Central Bank of Nigeria (CBN) has raised the Monetary Policy Rate (MPR), which measures interest rates from 16.5 percent to 17.5 percent to tame inflation.

ConsumerConnect reports Mr. Godwin Emefiele, Governor of CBN, announced this development after the Bank’s Monetary Policy Committee (MPC) meeting Tuesday, January 24, 2023, in Abuja, FCT.

The MPC raised the MPR by 100 basis points to 17.5 percent, and kept the asymmetric corridor at +100/-700 basis points around the MPR.

The MPC retained Cash Reserve Ratio (CRR) by 32.5 percent while liquidity ratio is kept at 30 percent.

Emefiele said MPC “members welcome the recent deceleration of the year-on-year headline inflation, noting that the persistence in policy rate hike over the last few meetings of the committee have started to yield the expected decline in inflation.”

He explained the Committee considered a perennial scarcity of Premium Motor Spirit (PMS), also known as petrol, the 2023 General Elections, continuous rise in energy prices, exchange rate pressure as well as continuous rise in insecurity.

He said committee members noted that the Naira redesign has huge moderating factors to price development on cash.

Impact of high inflation on living standards

While disclosing the Committee’s decision, Emefiele said, “MPC was of the view that although the inflation rate moderated marginally in December, the economy remained confronted with the risk of high inflation with adverse consequences on the general standards of living.

“Committee, therefore, decided to sustain the current stance of policy at this point in time to further rein in inflation aggressively.”

Emefiele also stated: “MPC voted to raise the MPR to 17.5 percent, retain the asymmetric at +100/-700 basis points around the corridor.”

Why January 31 deadline for old Naira notes stays: Emefiele

The CBN as well restated January 31, 2023, deadline for the validity of the old N200, N500, and N1,000 notes remains.

There is no reason for the country’s currency in circulation to rise from N1.4trillion to N3.2trillion in seven years, he noted.

According to him, some persons are hoarding the Naira and embracing currency speculation.

He said: “I must say here that unfortunately, I don’t have good news for those who feel that we should shift the deadline. My apologies.

“The reason is because just like the President has said more than two occasions and even to people privately, that for us, 90 days, in fact, we feel it is 100 days, that it is enough for anyone who has money or the old currency to deposit it in the bank.”

The CBN Chief: “And we took every measure to ensure all the banks remain open to receive all old currencies.

“100 days we believe is more than adequate.

“We called on the banks, not only are we requesting you to extend your banking hours so that you can receive old currencies, but we are also asking you to keep your doors open on Saturdays, ladies, and gentlemen, the banks did not even have any reasons to even keep their banking halls open on Saturdays neither did they see the kind of rush that they anticipated.

“We do not see any reason to begin to talk about a shift because people could not deposit their old monies into their banks.”

‘1.4 million agents available for cash swap’

Emefiele also said he recently met with the Nigeria Governors’ Forum and Governors Inuwa Yahaya (Gombe) and Mai Mala Buni (Yobe), and he told them that there is no going back on the January 31 deadline.

The CBN has 1.4 million super agents nationwide to collect old naira notes in exchange for new notes in riverine and upland areas, stated he.

Emefiele said: “Money is going down and is circulating to the lower rung of the community.

“We have 1.4 million points of our super agents; those agents are going to be available to conduct cash exchanges.

“The super agents are like kiosks, shops in your community, whether it is a riverine or upland area, they are there, selling sweets, selling kola nuts but they have been appointed as agents that will do cash exchange and cash swap for you. This, we have put in place.”

‘CBN agents in areas around Sambisa’

Emefiele further stressed that CBN agents are all over the country including areas around Sambisa, in Borno State.

“I’ll give a few examples: we have some information and videos about our staff and agents how they are doing cash swaps in our communities.

“In areas like Baga, Monguno, Rann on the Lake Chad Basin, in Banki, Kirawa, Gwoza on the borders of Cameroon, Ngoshe, Bama, Chibok, Damboa, Ngala, Izge… all these are areas around the Sambisa.

“Our agents and our staff are all there conducting cash swap and exchanges of old to new currencies,” he said.

The Governor of CBN also expressed hope that before the deadline, all the “noise” about the scarcity of new notes would have subsided.

Recall that the CBN October 26, 2022, announced its plan to redesign the three banknotes.

President Muhammadu Buhari subsequently unveiled the redesigned N200, N500, and N1,000 notes November 23, 2022, while the Bank fixed a January 31 deadline for the validity of the old notes as legal tender in the country.

The Bankers’ Bank also pegged its weekly cash withdrawal limits to N500,000 for individuals and N5million for corporate firms.

There have been concerns from several Nigerian consumers over the slow spread of the three new Naira notes as the January 31 deadline approaches in recent times.

The banking sector regulator, nonetheless, has restated that the date stands.

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