MPR

CBN's Shocking Move: MPR Increased to 22.75%! What's the Impact?

CBN shook the financial world by raising the MPR to 22.75%! Find out how this affects SMEs, the stock market, and more.

The Central Bank of Nigeria (CBN) sent shockwaves through the financial sector with its decision to increase the Monetary Policy Rate (MPR) to a staggering 22.75%. Financial expert Uche Uwaleke criticized the move, calling it 'overkill' and questioning its impact on the economy. The Lagos Chamber of Commerce and Industry (LCCI) also expressed concerns about the high lending rates hurting small and medium enterprises (SMEs).

The MPR hike had immediate consequences, with the stock market plummeting by N773 billion. This drastic drop reflected investors' reactions to the aggressive increase in interest rates. The Centre for the Promotion of Private Enterprise (CPPE) criticized the decision, stating that it does not align with Nigeria's unique economic challenges.

Economic and financial experts supported the CBN's decision, highlighting the need to address inflationary pressures. Despite the backlash, the CBN governor defended the increase, emphasizing evidence-based policymaking. Analysts predict that the equities market will face further challenges following the 400 basis points hike in the MPR.

The recent MPR increase by the CBN has sparked heated debates among financial professionals and policymakers. While some believe it is necessary to combat inflation, others warn of potential adverse effects on businesses and the economy. With uncertainty looming, all eyes are on the repercussions of this bold monetary policy move.

Did you know? The GDP rose from 2.54% in Q3 of 2023 to 3.46% in Q4 when the MPC didn't raise rates, according to Uche Uwaleke. The Lagos Chamber of Commerce and Industry (LCCI) advised authorities to address factors driving inflation in response to the MPR hike.