Business News

CBN Hikes Interest Rate by 150bps to 26.25% to Tackle Inflation, Weak Naira

Interest Rates

By Adedapo Adesanya

The Central Bank of Nigeria (CBN)’s Monetary Policy Committee (MPC) has increased the benchmark interest rate by 150 basis points to 26.25 per cent from 24.75 per cent as it continues to tackle inflation that is affecting the country’s economic growth.   

The Governor of the CBN, Mr Yemi Cardoso, stated this at the press briefing after the 295th MPC meeting of the bank on Tuesday in Abuja.  

Furthermore, the bank retained the Cash Reserve Ratio (CRR) of Deposit Money Banks (DMBs) at 45 per cent and put the Asymmetric corridor around the MPR at +100 and –300 basis points.

The move beat expectations by analysts at Meristem Securities which expected the apex bank to jack up the rate by 1.00 per cent to 25.75 per cent.

The National Bureau of Statistics (NBS) said last week that inflation in Nigeria rose by 33.69 per cent in April 2024 as a result of rising prices of goods and services.

The central bank has continued to hike the rates to attract foreign exchange (FX), which the country needs at the moment to stabilise the Naira.

At its last meeting, the CBN raised the MPR by 200 basis points, from 22.75 per cent to 24.75 per cent, in response to rising inflation.

The committee also adjusted the asymmetric corridor around the MPR at +100 to -300 basis points, retained the liquidity ratio at 30 per cent, and the Cash Reserve Ratio (CRR) at 45 per cent for commercial banks and adjusted the CRR of merchant banks from 10 per cent to 14 per cent.

Mr Cardoso also announced that the next MPC will be held on July 22-23, 2024.