CBN Raises Interest Rate to Record 22.75% in Bold Move
Written by Deborah Oyinloye on February 27, 2024
The Monetary Policy Committee of the Central Bank of Nigeria (CBN) has taken decisive action, hiking the benchmark interest rate by 400 basis points to an unprecedented 22.75%.
In a statement following the first MPC meeting of the year, CBN Governor, Olayemi Cardoso, outlined the committee’s decisions, including adjustments to the asymmetric corridor around the MPR and raising the cash reserve ratio.
Cardoso emphasized, “All 12 members of the committee decided to further tighten monetary policy by raising the MPR by 400 basis points to 22.75%… The committee also raised the cash reserve ratio from 32.5% to 45% while retaining the liquidity ratio at 30%.”
This move signifies a significant shift from the previous MPC meeting in July 2023, where the MPR was increased by 25 basis points. Since May 2022, the MPR has steadily climbed from 13% to its current level.
Market analysts had varied expectations leading up to the MPC meeting, but the announced rate exceeded all projections, reflecting the CBN’s determination to control inflation and stabilize the naira.
President Bola Ahmed Tinubu advocated for reduced interest rates to stimulate investment and consumer spending, aiming to sustain economic growth. However, the CBN’s decision underscores the urgency to address inflationary pressures and currency depreciation.
Author: Deborah Oyinloye
With an interest in media, Deborah aims to impart the lives of people positively.
