The Central Bank of Nigeria (CBN) has increased its interest rate by 50 basis points, moving from 26.25% to 26.75%. This adjustment, announced by CBN Governor Olayemi Cardoso at the conclusion of the bank’s 296th Monetary Policy Committee (MPC) meeting in Abuja, represents the fourth consecutive rate hike in 2024.
Along with the rate increase, the MPC established the Cash Reserve Ratio (CRR) for Deposit Money Banks at 45% and for merchant banks at 14%. The liquidity ratio has been set at 30%. The CBN also expanded the asymmetric corridor around the Monetary Policy Rate (MPR) from +100 to –300 basis points to +500 and –100 basis points.
Cardoso attributed the rate hike to current economic challenges, including inflation and the need for foreign exchange market stabilization. Recent federal policies aimed at importing staple foods to combat food inflation were also noted, though caution was advised against measures that might harm local food production. The alignment of the official exchange rate with the parallel market rate was praised as a step to reduce market arbitrage.
Credit: Nairametrics (Text Excluding Headline)
