The Central Bank of Nigeria (CBN) has implemented yet another increase in its monetary policy rate (MPR), making it the 11th consecutive hike since May 2022. The MPR, which plays a crucial role in determining interest rates within the country, has been raised by 50 basis points to 26.75 percent. This signifies a continuous escalation in the cost of borrowing for businesses and individuals.

Olayemi Cardoso, the CBN governor, announced the latest rate hike following the 296th Monetary Policy Committee (MPC) meeting in Abuja on Tuesday. Furthermore, the apex bank has also adjusted the asymmetric corridor around the MPR, changing it from +100/-300 to +500/-100 basis points.

In addition to the MPR adjustment, the MPC has maintained its stance on the Cash Reserve Ratio (CRR) for deposit money banks, leaving the current level at 45 percent. However, a new rate of 14 percent has been set for merchant banks.

Cardoso attributed the continuous series of rate hikes to the persistent issue of high food and core inflation in Nigeria. Expanding on the severity of the food crisis, which has significantly impacted food supply and security, the CBN governor highlighted the essential need for sustainable measures to enhance food production and accessibility in Nigeria.

The committee, in delving into the nation’s economic and financial landscape, evaluated recent developments against potential risks and ultimately concluded that increasing interest rates was the most appropriate measure. However, analysts are expressing concerns that this decision may further stifle economic growth, potentially leading to a significant negative impact on job creation.

Cardoso highlighted Nigeria’s failure to diversify its economy as a significant issue.

He expressed concern about the country’s heavy reliance on oil revenue, which has made the economy less robust.