CBN raises savings rate to 4.2%

The Central Bank of Nigeria (CBN) has reviewed upward the minimum interest rate payable on savings deposits to 4.2 percent from 0.15 percent, which is 30 percent of the Monetary Policy Rate (MPR).

This 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.

Consequently, the letter said effective August 1, 2022, the negotiable minimum interest rate on local currency savings deposits should be 30 percent of the Monetary Policy Rate.

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.

Nigeria’s headline inflation surged to 19.64 percent in July 2022 on a year-on-year basis, the highest in 16 years and 10 months, according to data from the National Bureau of Statistics (NBS).

In September 2020, the CBN reduced the minimum interest rate payable on local currency savings deposits from 30 percent to 10 percent of MPR, as part of efforts to ameliorate the impact of Covid-19 pandemic.

This, according to the banking sector regulator, was aimed at stimulating growth in the larger economy showing the economic slowdown occasioned by the pandemic.

However, following the return to full normalcy and considering the prevailing macroeconomic conditions, it has become necessary to effect an upward adjustment of the interest rate payable on local currency savings deposits, the CBN said in the letter.

Hope Moses-Ashike

Hope Moses-Ashike is an Associate Editor, Banking and Finance, with more than a decade of experience reporting on Nigeria’s financial system and broader economy. She closely tracks market movements, monetary policy decisions, company disclosures, regulatory actions, economic indicators, and global developments, and interprets what they mean for businesses, investors, policymakers, and households. Her reporting helps readers understand complex issues such as inflation trends, foreign exchange market dynamics, interest rate decisions, bank performance, and investment risks. She also covers major international events and periodically travels to Washington, D.C., to report on the World Bank/IMF Spring and Annual Meetings. Her dedication to financial journalism has earned her multiple recognitions and invitations to high-level professional development programmes. She is an alumna of the International Visitors Leadership Programme (IVLP) in the United States and holds an Advanced Financial Journalism Certificate from the Press Association Training in London, UK. Her other notable achievements include completing the Lagos Business School CMC Programme, the Bloomberg Media Africa Initiative Programme, and a Master Class in Journalism at Rhodes University in South Africa.