CBN raises interest rate to 27.25%

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The Central Bank of Nigeria (CBN) raised its Monetary Policy Rate (MPR) by 50 basis points on Tuesday, bringing the benchmark interest rate to 27.25 percent. This marks the fifth consecutive rate hike this year.

The Governor of the CBN, Olayemi Cardoso, disclosed this after a two-day Monetary Policy Committee (MPC) meeting in Abuja.

Cardoso, as Chairman of the MPC said it was the unanimous decision by the 11 committee members to increase the rate, aimed to further curb inflationary pressures.

Also, the Cash Reserve Ratio (CRR) of commercial banks was increased by 500 basis points from 45% to 50% while that of merchant banks was increased by 200 basis points to 16%.

Furthermore, the MPC raised the asymmetric corridor around the MPR to +500 and –100 basis points while the liquidity ratio was retained at 30%.

The Governor of the CBN noted that the decision to further tighten the monetary policy was a unanimous one by members of the Monetary Policy Committee (MPC).

A statement signed by the CBN explained that the decision to raise interest rate was based on recent events in the economy regarding inflation and the stability of the foreign exchange market.

He attributed further tightening of the monetary policy to the challenges of food inflation, flooding in many parts of the country, rising petrol and energy prices.