CBN Increases Interest Rates Again as Inflation Declines

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) increased the interest rate by 50 basis points to 27.25 percent, marking the fifth increase since February 2024.

This was revealed by CBN Governor Olayemi Cardoso on Tuesday during a press conference following the 297th MPC meeting in Abuja.

In addition, Cardoso announced that the Cash Reserve Ratio (CRR) for Deposit Money Banks (DMBs) would increase from 14 to 16 percent, while for Merchant Banks, it would rise from 45 to 50 basis points. The committee also decided to maintain the Asymmetric Corridor at +500/-100 basis points around the Monetary Policy Rate (MPR) and keep the Liquidity Ratio (LR) at 30%.

The National Bureau of Statistics (NBS) reported that in August, the country's inflation rate decreased to 32.15 percent, marking the second consecutive month of decline.

During the most recent MPC meeting in July 2024, the apex bank increased the interest rate to 26.75 percent.

This recent rate hike comes just five days after the US Federal Reserve, for the first time since July 2023, announced a significant 0.5 percent interest rate reduction.

Muda Yusuf, economist and executive director of the Centre for the Promotion of Private Enterprise, has called for a halt to further interest rate hikes. Since February 2024, the CBN has raised interest rates four times, from 22.75 percent to 26.75 percent. Before Cardoso's appointment as CBN Governor in September of last year, the interest rate in the country was 18.75 percent.