The Central Bank of Nigeria (CBN) has announced a significant increase in the monetary policy rate by 400 basis points, from 18.5% to 22.75%, in a bid to address the country's soaring inflation, currently standing at 29.90% as of January.
The announcement was made by CBN Governor, Olayemi Cardoso, during the 293rd Meeting of the Monetary Policy Committee press briefing held in Abuja.
The decision to hike the interest rate to 22.75% from the previous 18.5% comes in response to the country's persistently high inflation rate, which reached 29.90% in January.
In addition to the interest rate adjustment, the CBN also increased the Cash Reserve Ratio to 45% from 32.5%.
Governor Cardoso emphasised that these measures are intended to moderate inflation in the short to medium term.
He noted the importance of collaboration with other government agencies to address underlying factors contributing to inflation, particularly insecurity.
Regarding regulatory measures, Cardoso stated that the CBN is adopting a more aggressive regulatory stance to ensure compliance with its policies.
He warned that operators failing to adhere to regulations would face consequences as the bank strives to enhance market liquidity.
The decision marks the first interest rate hike by the Monetary Policy Committee (MPC) since July.
The MPC's move to tighten monetary policy measures aligns with earlier predictions by industry experts, including Bismarck Rewane, Chief Executive Officer of the Financial Derivatives Company, who anticipated the necessity of interest rate adjustments amidst rising inflation and economic challenges.