CBN raises interest rate to 27.25% to moderate inflation

The Central Bank of Nigeria (CBN) has raised its Monetary Policy Rate (MPR) to 27.25% from 26.75% “to moderate inflation” which currently stands at 32.15%.

The CBN Governor, Olayemi Cardoso made this known while addressing journalists after the bank’s 297th Monetary Policy Committee (MPC) meeting on Tuesday, September 24, 2024.

“The committee was unanimous in its decision to further tighten policy and thus decided as follows, one: raise the MPR to 27.25 %,” Cardoso said.

The new rate reflects an 8.5% increase in interest rates.

He added that the MPC also raised the Cash Reserve Ratio (CRR) of Deposit Money Banks by 500 basis points to 50% from 45%.

He said, “The MPC decided to retain the asymmetric corridor around the MPR at plus 500 to minus 100 basis points. It also raised the Cash Reserve Ratio of deposit Money banks by 500 basis points to 50% from 45% and merchant banks by 200 basis points to 16% from 14% and retained the liquidity ratio at 30%.”

Cardoso further said the MPC retained the asymmetric corridor around the MPR at +500/-100 basis points and also retained the Liquidity Ratio at 30%.

“The Committee noted the moderation in headline inflation year-on-year in July and August.

“In addition, the MPC noted the relative stability and convergence in the exchange rate across the various market segments, resulting from the apex bank’s tight monetary policy stance,” he said.

According to him, this is expected to improve confidence enabling economic agents to plan in the medium to long term.