Inflation: CBN raises savings interest to 4.2%

Bank customers in the country are now to be paid more interest on their savings after the Central Bank of Nigeria (CBN) reviewed upward minimum interest payable to 30 per cent of the Monetary Policy Rate (MPR).

At its last meeting in July, the Monetary Policy Committee(MPC) of the CBN had raised MPR to 14 per cent due to the persistent rise in inflation rate in the country.

The upward review of interest on savings was stated in a circular signed by the CBN director, Banking Supervision, Haruna Mustafa, and issued to all banks dated August 15, 2022.

With the new circular, banks are expected to increase interest rate on savings from 10 per cent of MPR to 30 per cent of MPR with effect from August 1, 2022. Consequently, bank customers can now earn up to 4.2 per cent which is 30 per cent of the 14 per cent MPR as against 1.4 per cent which was 10 per cent of the MPR.

The circular as seen by LEADERSHIP reads: “It will be recalled that as part of the efforts to ameliorate the impact of the COVID-19 pandemic, the Central Bank of Nigeria reduced the minimum interest rates payable on local currency savings deposits from 30 per cent to 10 per cent of the Monetary Policy Rate (MPR). This was aimed at stimulating growth in the larger economy following 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.

“Accordingly, effective August 1, 2022, the negotiable minimum interest rate on local currency savings deposits shall be 30 per cent of MPR. This supersedes our letter dated September 1, 2020, referenced BSD/DIR/GEN/LAB/13/052 on the subject.”