The Central Bank of Nigeria’s Monetary Policy Committee (MPC) has increased the benchmark interest rate by 200 basis points to 24.75 percent. This decision was made during the second MPC meeting under the tenure of CBN Governor Yemi Cardoso, held in Abuja on Tuesday. The new interest rate is a jump from the 22.75 percent announced about a month ago and the second rate hike by the current committee.
Cardoso announced that the Cash Reserve Ratio (CRR) of deposit money banks would remain at 45 percent, but the CRR of merchant banks would be adjusted from 10 percent to 14 percent. The committee also decided to retain the liquidity ratio at 30 percent.
“The considerations of the committee at this meeting focused on the current inflationary pressures and the need to anchor inflation expectations, as well as ensure sustained exchange stability,” said Cardoso. He added that these measures were taken to combat the country’s rising inflationary rate, which was pegged at 31.70 percent in February.
The CBN chief also noted that the MPC members believe the headline inflation in the country is triggered mostly by a hike in the cost of food. “The committee, therefore, was of the view that addressing food insecurity is key to containing the current inflationary pressures,” he said while commending the Federal Government’s efforts at curbing food insecurity, including the distribution of palliatives.
The next MPC meeting will be held between May 20th and May 21st, 2024.