CBN increases interest rate to 27.5%

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has further raised the interest rate by 25 basis points to 27.50 per cent from 27.25 per cent.

The Governor of the CBN and Chairman of the MPC, Yemi Cardoso, announced the raise on Tuesday in Abuja while presenting a communiqué after the 298th meeting of the committee.

Cardoso, however, announced that the committee also decided to hold all other parameters constant.

The MPC thus retained the Cash Reserve Ratio (CRR) at 50 per cent for Deposit Money Banks (DMBs) and 16 per cent for merchant banks, retained the Liquidity Ratio at 30 per cent and also retained the Asymmetric Corridor at +500/-100 basis points around the MPR.

Cardoso said that the decisions were unanimously adopted by all 12 members of the MPC who were present at the meeting.

The News Agency of Nigeria (NAN) reports that Tuesday’s decision is the sixth consecutive tightening of the MPR since Cardoso assumed office as CBN governor.

The first decision under Cardoso was an aggressive hike in the MPR by 400 basis points from 18.75 per cent to 22.75 per cent in February.

In March, the committee again increased the MPR by 200 basis points to 24.75 per cent, followed by subsequent hikes to 26.25 per cent in May, 26.75 per cent in July, and 27.25 per cent in September.

Cardoso has thus raised the MPR by 875 basis points since he assumed office.

These decisions are aimed at combating inflation, stabilizing the economy, and promoting economic growth.