By Peter Egwuatu
Pension Fund investment in Federal Government debt instruments (securities) rose 16.5 per cent, year-on-year to N9.9 trillion in February caused by the high interest rate regime prompted by the inflation fighting measures of the Central Bank of Nigeria, CBN.
Since June last year, the CBN, has raised the Monetary Policy Rate, MPR, five times and by 650 basis points to 18 per cent in a bid to curtail steady rise in the inflation rate to 21.9 per cent in February.
The MPR is the benchmark for determining the interest rate charged by banks and also influences the yields on fixed income securities.
The hike in MPR prompted a general rise in interest rates with yields on one month deposits rising to 7.56 per cent in February from 3.57 per cent in May last year. Similarly, the interest rate on the Federal Government’s 3-years Savings Bonds rose to 11.04 per cent in February from 8.93 per cent in May last year.
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Source: Vanguard Newspaper
