CBN Raises Interest Rate to 27.25%

Financial analysts had predicted the possibility of the CBN holding or lowering interest rates, especially after two consecutive months of declining inflation.

Abuja, Nigeria — The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has raised the Monetary Policy Rate (MPR) to 27.25%.

This decision marks an increase of 50 basis points from the previous 26.75% announced in July 2024.

Speaking at a press briefing in Abuja following the committee’s fifth meeting of the year, CBN Governor, Dr. Olayemi Cardoso, confirmed the unanimous decision to further tighten monetary policy.

“The committee was unanimous in its decision to raise the MPR to 27.25%,” Cardoso said.

The MPR, which serves as the benchmark interest rate in the Nigerian economy, forms the basis for all other interest rates within the system.

This latest increase reflects an 8.5% rise in interest rates under the leadership of Cardoso, who assumed office a year ago.

In addition to the hike in the MPR, the MPC made several other adjustments. The Cash Reserve Ratio (CRR) for deposit money banks was raised by 500 basis points to 50%, while the CRR for merchant banks increased by 200 basis points to 16% from 14%. However, the liquidity ratio was retained at 30%.

“The MPC also decided to retain the asymmetric corridor around the MPR at +500 to -100 basis points,” Cardoso added.

Financial analysts had predicted the possibility of the CBN holding or lowering interest rates, especially after two consecutive months of declining inflation. However, the apex bank has chosen to further tighten its monetary stance.