The Monetary Policy Committee of the Central Bank of Nigeria has voted to increase the monetary policy rate, which measures the benchmark interest rate, to 27.25 percent.
The monetary policy rate is the baseline interest rate in an economy. Every other interest rate used within an economy is built on the MPR.
Addressing journalists at an ongoing press briefing after the committee’s fifth meeting for the year at the CBN headquarters on Tuesday in Abuja, the governor of the apex bank, Olayemi Cardoso, said the committee members unanimously decided to further tighten monetary policy.
This new rate is an increase of 50 basis points from 26.75 percent announced by the apex bank in July 2024.
The new rate reflects an 8.5 percent increase in interest rates under the current leadership, which took office a year ago.
Cardoso said, “The committee was unanimous in its decision to further tighten policy and thus decided as follows, one: raise the MPR to 27.25 per cent.”
However, the MPC retained the asymmetric corridor around the MPR at +500 to -100 basis points and raised the Cash Reserve Ratio of deposit money banks by 500 basis points to 50 percent and merchant banks by 200 basis points to 16 percent from 14 percent and retained the liquidity ratio at 30 percent.
He added, “The MPC decided to retain the asymmetric corridor around the MPR at plus 500 to minus 100 basis points. It also raised the Cash Reserve Ratio of deposit Money banks by 500 basis points to 50 percent from 45 percent and merchant banks by 200 basis points to 16 percent from 14 percent and retained the liquidity ratio at 30 percent.”
Financial experts had anticipated that the CBN would either hold or lower interest rates following two consecutive months of declining headline inflation.
More details soon…