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CBN Raises Interest Rate To 26.75% As Inflation Surges To New Heights
The MPC expressed concern that persistent food inflation and increasing energy costs were continuing to destabilize prices.
Abuja, Nigeria– The Central Bank of Nigeria (CBN) has hiked its interest rate by 150 basis points, elevating the Monetary Policy Rate (MPR) from 24.75% to 26.75%.
This marks the third consecutive increase as the bank intensifies its efforts to curb inflation, which surged to a staggering 33.69% in April 2024.
The decision came after a two-day meeting of the bank’s Monetary Policy Committee (MPC), which focused on assessing economic conditions and inflationary pressures.
CBN Governor Yemi Cardoso, who also chairs the MPC, on Tuesday, stated that, “The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) held its 295th meeting on the 20th and 21st of May 2024 to review recent economic and financial developments and assess risks to the outlook.
“Decisions of the MPC. The committee’s decisions are as follows: 1. Raise the MPR by 150 basis points to 26. 25 per cent from 24.75 per cent.”
He said the Cash Reserve Ratio (CRR) of Deposit Money Banks (DMBS) was retained at 45 per cent.
The MPC also retained the Cash Reserve Ratio (CRR) of deposit money banks at 45% and merchant banks at 14% and retained the Liquidity Ratio at 30%.
Cardoso said the committee was mindful of the effect of rising prices on households and businesses and expressed its resolve to take necessary measures to bring inflation under control.
He said despite the June 2024 uptick in inflation, prices are expected to moderate in the near term as monetary policy gaining further traction in addition to further measurers by the fiscal authority to address food inflation.
The MPC expressed concern that persistent food inflation and increasing energy costs were continuing to destabilize prices.
Nigeria’s inflation surged to a record high of 34.19% in June, as reported by the National Bureau of Statistics (NBS).
Food inflation increased in June 2024 to 40.87% year-on-year, up from 40.66% in May 2024 and significantly higher than the 25.25% recorded in June 2023, marking a 15.62% rise.
