Central Bank of Nigeria Increases Interest Rate to Combat Inflation
In a strategic move aimed at curbing rising inflation, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has decided to raise the country’s interest rate by 25 basis points, bringing it to 27.50 percent in November 2024, up from 27.25 percent in September. The announcement was made by CBN Governor Olayemi Cardoso during a press briefing following the 298th MPC meeting held in Abuja.
The MPC reached a unanimous agreement to adjust the monetary policy rate, a decision largely motivated by the urgent need to address inflation, which reached 33.87 percent in October 2024.
During the briefing, Cardoso also confirmed that the Cash Reserve Ratio (CRR) has been adjusted upward for deposit money banks, from 45 percent to 50 percent, and for merchant banks, from 14 percent to 16 percent. Additionally, the liquidity ratio has been maintained at 30 percent, along with an asymmetric corridor set at +500/-100 basis points in relation to the monetary policy rate.
The CBN governor highlighted that all other monetary policy measures also remain unchanged. At the previous meeting in September, the committee had raised the monetary policy rate by 50 basis points to 27.25 percent, citing concerns about core inflation, increased money supply, fiscal deficits, and rising food prices as significant factors influencing the decision.
While headline inflation was on a downward trend during the last MPC meeting, the underlying core inflation continued to be high, largely attributed to escalating energy costs and various structural issues within the economy.
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