CBN returns interest rate on interventions funds to 9%
The Central Bank of Nigeria (CBN) on Wednesday returned the interest rates on all its interventions to 9 percent per annum.
This was disclosed in a circular to all banks and Other Financial Institutions (OFIs), dated August 17, 2022 and signed by Chibuzo Efobi, director, financial policy and regulations department of the CBN.
On March 1, 2020, the CBN reduced the interest rates on its intervention funds from 9 percent to 5 percent per annum for one year.
The reduction was part of measures to mitigate the negative impact of Covid-19 pandemic on the Nigerian economy.
According to the banking and other financial sector regulation, all intervention facilities granted effective July 20, 2022 shall be at 9 percent per annum.
The circular said all existing intervention facilities granted prior to July 20, 2022 shall be at 9 percent per annum effective September 1, 2022.
“Further enquiries on the provisions of this circular may be referred to the director, development finance department,” the circular stated.
The CBN had extended the 5 percent per annum interest rate on its intervention facilities for one year. The extension, which took effect retrospectively on February 28, 2022 was announced in a circular to all banks and other financial institutions and signed by Efobi.
The circular reads: “Further to our circular dated March 15, 2022 (Ref: FPR/DIR/PUB/CIR/001/040) extending the period of interest rate reduction on all intervention facilities from 9 percent to 5 percent per annum (as part of measures to mitigate the negative impact of Covid-19 pandemic on the Nigerian economy) the Central Bank hereby reverts the interest rate on all its intervention facilities to 9 percent per annum.”
Read also: CBN raises savings rate to boost deposits
This is coming two days after the CBN reviewed upward the minimum interest rate payable to savings deposits to 4.2 percent from 0.15 percent, which is 30 percent of the Monetary Policy Rate (MPR).
The hike in deposits interest rate was disclosed in a letter to all banks titled “review of interest rate on savings deposits”, dated August 15, 2022 and signed by Haruna Mustafa, director of banking supervision.
The CBN had within two months this year, raised the MPR, its benchmark interest rate by 250 basis points to 14 percent.
The move was a decision taken by the Monetary Policy Committee (MPC) to curtail rising inflation in the country, which is also happening across the globe.