The Central Bank of Nigeria has ordered deposit money banks (DMBs) across Nigeria to increase interest on customers’ savings.

The apex bank directed banks to pay 4.65 per cent interest on savings deposit accounts, an increase of 4.2 per cent earlier. The directive is due to the 150 basis point addition in monetary policy rates to 15.5 per cent from 14 per cent.

The CBN’s decision came from an increase in the interest rates on savings deposits, which could mop up excess liquidity in the system.

Recall that Economic Confidential reported that the CBN governor, Godwin Emefiele, announced the MPC changes on Tuesday, September 27, 2022, at its MPC meeting. The Monetary Policy Rate (MPR) is the rate at which the apex bank lends money to banks.

It is a benchmark rate for lending in the financial services industry. Savings deposit rates are rates that banks pay customers for keeping their money in the banks. Initially, the CBN kept the MPR at 14 per cent, meaning a 30 per cent increase to 4.2 per cent.

The recent order is said to cushion the effect of inflation on customers’ savings and increase their purchasing power.