The Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC) has announced a 50 basis point increase in the interest rate, raising it from 26.25% to 26.75%.
This decision was disclosed by the Governor of the CBN, Mr. Olayemi Cardoso, at the conclusion of the bank’s 296th MPC meeting in Abuja.
In addition to the interest rate adjustment, the MPC set the Cash Reserve Ratio (CRR) for Deposit Money Banks at 45%, and for merchant banks, it was established at 14%. The liquidity ratio remains at 30%.
The CBN also modified the asymmetric corridor around the Monetary Policy Rate (MPR) from +100/-300 basis points to +500/-100 basis points.
Explaining the rationale behind the rate hike, Mr. Yemi Cardoso, Chairman of the MPC, cited current economic conditions, including inflation and the need to stabilize the foreign exchange market.
He emphasized the importance of recent federal government policies aimed at importing staple foods like rice, maize, and wheat to combat rising food inflation.
However, he cautioned that these measures should be carefully timed to avoid undermining local food production gains.
Mr. Cardoso also highlighted the positive impact of aligning the official exchange rate with the parallel market rate, which has helped reduce arbitrage opportunities.
This 50 basis point increase marks the fourth consecutive interest rate hike by the CBN in 2024, following similar increases in 2023.
Since Mr. Olayemi Cardoso assumed leadership of the CBN, the MPR has risen by a cumulative 800 basis points, from 18.75% to 26.75%.
Earlier in the year, the CBN raised the MPR by 400 basis points in February, followed by subsequent increases of 200 basis points and 150 basis points before the latest adjustment.
