Last week’s article published the summary of the key decisions of the first 2023 Monetary Policy Committees meetings held in Nigeria and the UK.
For the two countries, the key monetary policy is the Monetary Policy Rate as it is called in Nigeria or the Bank Rate as it is called in the UK.
Monetary Policy Rate
The Monetary Policy Rate (MPR), which is the interest rate the apex bank charges commercial banks, usually influences the cost of money in the economy. Since the MPR is the interest rate at which the Central Bank of Nigeria (CBN) loans money to commercial banks, it acts as a standard against which other lending rates in the economy are measured. A higher MPR signals to commercial banks that they should raise the interest rates on loans and advances to their clients in response, and the opposite is also true. Because of this, the MPR is a crucial tool for monetary policy, and its modification (or manipulation) is often intended to have an impact on a number of macroeconomic indicators, such as the rate of inflation. The policy rates are set so there is little disruption in the economy's liquidity and the money market is kept stable.
Below is a historical data of MPR in the past 1 year
The Bank Rate determines the interest rate the Bank of England charges commercial banks who keep funds with them. The UK's Bank Rate is the single most important interest rate. It is sometimes referred to in the media as the "Bank of England base rate" or even just "the interest rate”. It is the interest rate at which a country's central bank lends money to domestic banks, sometimes in the form of extremely short-term loans. The management of the bank rate is a technique through which central banks influence economic activity as it affects the interest rates such as bank charges for customers who borrow money or redeem savings. By reducing the cost of borrowing money, lower bank rates can encourage economic growth, while higher bank rates can restrain it when inflation is out of control.
Below is a historical data of Bank Rates in the past 1 year
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