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The Central Bank of Nigeria (CBN) has raised its Monetary Policy Rate (MPR) to 27.25%, up from 26.75%, in a bid to control inflation, which currently stands at 32.15%. This decision was announced by CBN Governor Olayemi Cardoso following the conclusion of the bank’s 297th Monetary Policy Committee (MPC) meeting on Tuesday, September 24, 2024.
Governor Cardoso emphasized the unanimous agreement of the MPC members to tighten monetary policy further, stating: “The committee was unanimous in its decision to tighten policy, hence the increase of the MPR to 27.25%.”
The rate hike reflects an 8.5% increase in interest rates, part of the CBN’s broader efforts to address inflationary pressures in the Nigerian economy.
In addition to raising the MPR, the MPC also increased the Cash Reserve Ratio (CRR) for Deposit Money Banks by 500 basis points, bringing it to 50% from its previous 45%. For merchant banks, the CRR was raised by 200 basis points, reaching 16% from 14%. The liquidity ratio was retained at 30%.
Cardoso highlighted that the committee also retained the asymmetric corridor around the MPR at +500/-100 basis points.
“The MPC noted a moderation in year-on-year headline inflation for July and August,” Cardoso said, further adding that the relative stability and convergence in exchange rates across various market segments is a result of the CBN’s tight monetary policy stance. He expressed optimism that this would boost market confidence and enable businesses and economic agents to plan more effectively in the medium to long term.
The decision to raise interest rates is part of ongoing efforts by the CBN to curb inflation and stabilize the Nigerian economy.
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