By Abiola Olawale
For the third time in 2024 alone, the Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC) has increased the benchmark interest rate by 150 basis points to 26.25% from 24.75%.
The Governor of the CBN, Yemi Cardoso made this disclosure on Tuesday while addressing a press briefing after the conclusion of the 295th MPC meeting of the bank.
Cardoso hinged the recent hike in bank interest rates on the continued efforts of the apex bank towards moderating inflation which reached 33.69% in April 2024 according to the National Bureau of Statistics (NBS).
He also disclosed that the CBN retained the Cash Reserve Ratio (CRR) of Deposit Money Banks (DMBs) at 45% and put the Asymmetric corridor around the MPR at +100 and –300 basis points. The bank further set the liquidity ratio of banks at 30%.
He said: “The committees’ decisions are as follows; raise the MPR by 150 basis points to 26.25% from 24.75%. Retain the asymmetric corridor around the MPR to +100 to –300 basis points. Retain the Cash Reserve Ratio (CRR) of Deposit Money Banks (DMBs) at 45% and retain the liquidity ratio at 30%.”
“The key focus of the MPC at this meeting remained to achieve price stability by effectively using tools available to the monetary authority to rein in inflation. Members observed that while year-on-year headline inflation in April 2024 rose moderately, the month-on-month headline food and core inflation declined significantly”
The New Diplomat recalls that this recent development makes it the third time the CBN increased the benchmark interest rate.
At the March MPC meeting, the benchmark rate had been increased by 200 basis points from 22.75 per cent to 24.75 per cent.
The CBN’s MPC in its February and March meetings had increased MPR by a combined 600 basis points. Today’s raise in MPR takes the total rate of increase to 750 basis points in just five months.
The apex bank is expected to hold its next MPC meeting in July 2024.
