CBN Hikes Interest Rate to 27.5% to Combat Inflation
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has unanimously agreed to raise the monetary interest rate to 27.50% from 27.25%. The move aims to address Nigeria’s escalating inflation, which reached 33.88% in October.
Announcing the decision during the 298th MPC meeting on Tuesday in Abuja, CBN Governor Olayemi Cardoso noted that all 12 members of the committee supported the hike. The MPC also retained the asymmetric corridor at +500 to -100 basis points.
CBN’s Monetary Adjustments
- Cash Reserve Ratio (CRR): Maintained at 15%.
- Liquidity Ratio: Retained at 30%.
Cardoso further disclosed that Nigeria’s foreign reserves increased to $40.88 billion as of November 21, 2024, up from $40.06 billion in October.
Recent History of Rate Increases
This latest adjustment follows a prior increase in September, where the MPC raised the Monetary Policy Rate (MPR) by 50 basis points to 27.25%. The current hike marks the fifth consecutive rate increase under Cardoso’s leadership as CBN Governor and MPC Chairman.
Context of the Decision
The continuous tightening of the monetary policy reflects efforts by the CBN to rein in inflationary pressures while stabilizing the economy. This approach aligns with global trends of increasing interest rates to curb inflation in challenging economic environments.
Observers are closely monitoring the impact of these policies on borrowing costs and overall economic growth, as businesses and consumers adjust to the higher interest environment.
