CBN hikes interest rate to 27.5%

The Central Bank of Nigeria (CBN) has increased the Monetary Policy Rate (MPR) from 27.25% to 27.50% to curb rising inflation.

This decision was made during the Monetary Policy Committee (MPC) meeting held at the CBN headquarters in Abuja.

Announcing the decision on Tuesday, CBN Governor Yemi Cardoso revealed that the MPC voted unanimously to implement a 25-basis-point hike in the benchmark interest rate.

Cardoso also stated that the Cash Reserve Ratio (CRR) for Deposit Money Banks remains at 50%, while Merchant Banks retain a CRR of 16%.

Additionally, the Liquidity Ratio (LR) was held steady at 30%, and the Asymmetric Corridor was maintained at +500/-100 basis points around the MPR.

“The Committee unanimously agreed to increase the monetary policy rate by 25 basis points to 27.50 per cent,” Cardoso said.

He explained that the decision was influenced by mounting inflationary pressures, with both food and core inflation rising year-on-year in October 2024.

“Members resolved to stay focused on managing price developments,” he added.

This marks the sixth time the CBN has raised interest rates in 2024. The last increase occurred in September when the rate was adjusted to 27.25% following a slight dip in inflation during August.

The National Bureau of Statistics (NBS) recently reported an inflation rate of 33.88% for October 2024, an increase from 32.7% in September.

This reflects a month-on-month rise of 1.18 percentage points. The NBS attributed the surge to higher transportation and food costs.

Year-on-year, the October inflation rate was 6.55 percentage points higher than the 27.33% recorded in October 2023, according to the Consumer Price Index (CPI) data.