The Central Bank of Nigeria (CBN) has hiked interest rates by 150 basis points, from 24.75% to 26.25%.
Following a two-day meeting, the bank’s Monetary Policy Committee (MPC) voted to raise the Monetary Policy Rate (MPR) for the third time in a row to control the country’s skyrocketing inflation, which is expected to reach 33.69% in April 2024.
“The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) held its 295th meeting on the 20th and 21st of May 2024 to review recent economic and financial developments and assess risks to the outlook,” the CBN Governor Yemi Cardoso who is also the MPC chairman said on Tuesday.
“Decisions of the MPC. The committee’s decisions are as follows: 1. Raise the MPR by 150 basis points to 26. 25 per cent from 24.75 per cent.”
Cardoso, however, said the Cash Reserve Ratio (CRR) of Deposit Money Banks (DMBS) was retained at 45 per cent. The MPC also put the Asymmetric Corridor around the MPR at +100 and –300 basis points. It retained the liquidity ratio at 30 per cent.
Monday’s announcement comes amid soaring prices of commodities and a rising cost of living.
Pushed majorly by the removal of fuel subsidy last year and the floating of the naira, Nigerians are battling historic high inflation levels.
Despite protests and pressures from labour unions, President Bola Tinubu has repeatedly called for patience, expressing optimism that his government’s reforms will yield fruit.
In a bid to combat the falling value of the naira, the CBN in recent months targeted the operations of cryptocurrency exchange Binance. That and other measures led to an appreciation of the currency. But the gains appear to have stalled in recent weeks.
The CBN chief who admitted the rising inflation levels in the country said the key focus of the MPC meeting was to achieve price stability by using tools available to rein in inflation.
He said the inflation pressure is being driven largely by food inflation, citing rising costs of transportation, infrastructure challenges, insecurity, and exchange rate issues as some of the factors affecting it.