CBN Hikes Interest Rate to 27.5% to tame surging inflation
Cardoso has, thus, raised the MPR by 875 basis points since he assumed office.
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has further raised interest rate by 25 basis points to 27.50 percent from 27.25 percent as part of efforts to ostensibly tame inflation.
Cardoso said the MPC voted unanimously to raise the MPR by 25 basis points from 27.25% to 27.50%; and retain the Cash Reserve Ratio (CRR) at 50% for Deposit Money Banks and 16% for Merchant Banks.
“The Committee was unanimous in its agreement to raise the monetary policy rate by 25 basis points to 27.50 percent,” Cardoso said.
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The Governor of the CBN and Chairman of the MPC, Yemi Cardoso, announced the raise on Tuesday in Abuja, while presenting a communiqué after the 298th meeting of the committee.
Cardoso, however, announced that the committee also decided to hold all other parameters constant.
The MPC, thus, retained the Cash Reserved Ratio (CRR) at 50 per cent for Deposit Money Banks (DMBs) and 16 per cent for merchant banks, retained the Liquidity Ratio at 30 per cent, and also retained the Assymetric Corridor at +500/-100 basis points around the MPR.
Cardoso said that the decisions were unanimously adopted by all 12 members of the MPC who were present at the meeting.
BRANDECONOMY reports that Tuesday’s decision is the sixth consecutive tightening of the MPR since Cardoso assumed office as CBN governor.
The first decision under Cardoso was an aggressive hike in the MPR by 400 basis points from 18.75 per cent to 22.75 per cent in February.
In March, the committee, again, increased the MPR by 200 basis points to 24.75 per cent, followed by subsequent hikes to 26.25 in May, 26.75 per cent in July, and 27.25 basis points in September.
Cardoso has, thus, raised the MPR by 875 basis points since he assumed office.
These decisions are aimed at combating inflation, stabilising the economy, and promoting economic growth.
The CBN chief also said the MPC retained the Liquidity Ratio (LR) at 30% and Asymmetric Corridor at +500/-100 basis points around the MPR.
“The considerations of the meeting were held on the backdrop of renewed inflationary pressures as the headline food and core measures rose year on year in October 2024. Members therefore agreed unanimously to remain focused on addressing price developments,” Cardoso said.
This is the sixth time the CBN has raised the interest rate since February 2024. In September, the bank pushed the rate to 27.25% following a drop in the country’s inflation level in August 2024.
