Nineteen Deposit Money Banks (DMBs) in Nigeria are now offering an 8.18% interest rate on savings accounts, aligning with the Central Bank of Nigeria’s (CBN) recent adjustment to the Monetary Policy Rate (MPR).
This development follows the CBN’s September 2024 decision to raise the MPR by 50 basis points to 27.25% as part of measures to tackle rising inflation.
CBN’s Monetary Policy Framework
The CBN mandates that the banks interest rates on customers’ deposits must not fall below 30% of the MPR, which currently translates to the 8.18% rate. Furthermore, the CBN requires all banks to publicly disclose their interest rates to ensure transparency and accountability.
Banks Complying with the Benchmark
Recent data from November 2024 reveals that 19 banks have pegged their savings deposit rates at 8.18%, including:
- Keystone Bank
- Polaris Bank
- Sterling Bank
- Zenith Bank
- Access Bank
- UBA
- First Bank of Nigeria, among others.
However, five banks are offering rates below the CBN benchmark, with FCMB at 1.15%, Stanbic IBTC at 2.73%, and GTBank and SunTrust Bank at 8%.
Conditional Savings Interest Rates
The CBN’s stipulated rate applies under certain conditions. For instance, if a customer makes more than four withdrawals in a month, the stipulated 8.18% interest rate does not apply.
Rising MPR Over the Years
Since June 2006, when the MPR was at 0.00%, the rate has steadily increased, reaching the current level of 27.25% in September 2024. This steady rise reflects the CBN’s efforts to manage inflation and ensure economic stability.
CBN Governor’s Perspective
CBN Governor Yemi Cardoso defended the continued increase in MPR, stating that maintaining a tight monetary stance is critical despite a recent decline in headline inflation.
“While previous hikes have effectively altered the inflation trajectory, maintaining a tight stance is necessary to safeguard these gains against potential reversals,” Cardoso said.
Global Monetary Policy Trends
Central banks worldwide are adjusting monetary policies to balance inflation control with economic stability:
- The Bank of England reduced rates in August as inflation fell to 2.5%.
- Brazil maintained its rate at 10.50% to ensure price stability.
- Turkey slightly raised rates for the first time since 2021 to combat 49% inflation.
The CBN’s policies have prompted Nigerian banks to offer competitive savings interest rates, benefiting customers amid inflationary pressures. However, meeting the conditions for these rates remains crucial for savers.
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