The Central Bank of Nigeria (CBN) has once again raised the country's interest rate by 50 basis points, bringing it to 27.25%. This marks the fifth increase since February 2024, reflecting the continued tightening of monetary policy. The announcement was made by CBN Governor Olayemi Cardoso at a press briefing following the 297th Monetary Policy Committee (MPC) meeting in Abuja on Tuesday.
In addition to the interest rate hike, the CBN also raised the Cash Reserve Ratio (CRR) by 50 basis points. The CRR for Deposit Money Banks (DMBs) has increased from 45% to 50%, while for Merchant Banks, it has risen from 14% to 16%. The Liquidity Ratio (LR) remains unchanged at 30%, and the Asymmetric Corridor is maintained at +500/-100 basis points around the Monetary Policy Rate (MPR).
This move comes as Nigeria's inflation rate has eased for the second consecutive month, with the National Bureau of Statistics (NBS) reporting an inflation rate of 32.15% for August. In July 2024, the MPC had previously raised the interest rate to 26.75%.
The latest rate hike follows just days after the U.S. Federal Reserve cut its interest rate by 0.5%, marking its first decrease since July 2023. Muda Yusuf, Executive Director of the Centre for the Promotion of Private Enterprise, had previously urged the CBN to halt its series of interest rate hikes.
Since February 2024, the CBN has raised the interest rate four times, from 22.75% to 26.75%. Prior to the appointment of Governor Cardoso in September last year, the interest rate was at 18.75%.
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