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.