CurrentReport Blog The Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC) has increased the interest rate by 50 basis points, bringing it to 27.25 percent. This marks the fifth hike since February 2024 as part of the bank’s efforts to stabilize the economy. CBN Governor Olayemi Cardoso made the announcement during a press briefing following the 297th MPC meeting held in Abuja on Tuesday.
In addition to the interest rate increase, the MPC raised the Cash Reserve Ratio (CRR) for Deposit Money Banks (DMBs) by 50 basis points, from 45 percent to 50 percent. For Merchant Banks, the CRR was raised from 14 percent to 16 percent. The Liquidity Ratio (LR) remains at 30 percent, while the Asymmetric Corridor stays at +500/-100 basis points around the Monetary Policy Rate (MPR).
This decision comes as Nigeria’s inflation rate eased for the second consecutive month, dropping to 32.15 percent in August, according to the National Bureau of Statistics (NBS). The CBN’s latest move follows a previous interest rate hike in July 2024, when the rate was raised to 26.75 percent.
The CBN’s decision to raise rates also contrasts with the recent action of the United States Federal Reserve, which cut its interest rate by 0.5 percent just five days ago, marking the first reduction since July 2023.
Despite the CBN’s efforts to curb inflation, economist Muda Yusuf, Executive Director of the Centre for the Promotion of Private Enterprise, had earlier urged the central bank to pause its rate hikes to avoid stifling economic growth.
