The Central Bank of Nigeria’s Monetary Policy Committee, MPC, hiked interest rates by 50 basis points on Tuesday, to 26.75 percent from 26.25 percent in May 2024.
Olayemi Cardoso, governor of the Central Bank of Nigeria, made the announcement during a press briefing on Tuesday at the conclusion of the two-day 296th MPC in Abuja.
According to him, the directive is to raise interest rates is to address the country’s growing core inflation and food inflation, which were 34.19 percent and 40.87 percent, respectively, in June.
He stated that members of the MPC are aware of the need to address rising food costs in Nigeria, which has necessitated the interest rates rise.
The other monetary parameters remained unaltered. The Cash Reserve Ratio stands at 45% for commercial banks and 14% for merchant banks. Similarly, the liquidity ratio stayed at 30%, while the asymmetric corridor was at +500/100.
The interest rates rise means that entrepreneurs, farmers, manufacturers, and investors would have to pay more to borrow from banks.
The 296th MPC meeting marks the fourth time the interest rates has been raised since Cardoso’s appointment in September of last year.
Recall that in May 2023, when President Bola Tinubu was inaugurated, Nigeria’s interest rate was 18.75 percent, while inflation was 22.41 percent.
Meanwhile, despite the CBN’s ongoing interest rate rise, the country’s inflation has not subsided.
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cc: Daily Post Ng
