The Central Bank of Nigeria has raised the monetary policy rate, known as the interest rate, by 200 basis points per cent to 24.75 per cent from 22.75 per cent in efforts to tackle rising inflation.
The CBN Governor, Olayemi Cardoso, disclosed this on Tuesday at the 294th Meeting of the Monetary Policy Committee press briefing in Abuja.
The bank retained the Cash Reserve Ratio to 45 per cent.
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The CBN Governor, Olayemi Cardoso, disclosed this while reading the communiqué of the first MPC meeting of the year on Tuesday in Abuja.
Addressing journalists at the end of the two-day meeting in Abuja, Cardoso said the committee voted to adjust the asymmetric corridor around the MPR to +100 to -700 from plus 100 to -300 basis points and raised the cash reserve ratio from 32.5 percent to 45 percent
He said, “All 12 members of the committee decided to further tighten monetary policy by raising the MPR by 400 basis points to 22.75 per cent from 18.75 per cent. Adjust the asymmetric corridor around the MPR to +100 to -700 from plus 100 to -300 basis points.
“The committee also raised the cash reserve ratio from 32.5 per cent to 45 per cent while retaining the liquidity ratio at 30 per cent.”
At the last meeting in July 2023, the MPC, headed by the former acting governor of the apex bank, Folashodun Shonubi, increased the monetary policy rate by 25 basis points to 18.75 per cent, from 18.5 per cent in May last year.
The capital requirement ratio was retained at 32.5 per cent while the liquidity ratio stood at 30 per cent.
Analysts’ expectations had been divergent ahead of the first MPC meeting, but the new rate surpassed all projections by financial experts.
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According to a Reuters poll released on Friday, Nigeria is expected to implement two aggressive interest rate hikes in less than two months to control inflation and strengthen the naira, following a few missed monetary policy sessions
It said the policy rate is expected to increase by 225 basis points to 21.00 per cent despite the local currency still trading near its record low on the black market.
President Bola Ahmed Tinubu had said interest rates needed to be reduced to increase investment and consumer purchasing in ways that sustain the economy at a higher level