Amid Inflation, CBN Raises Interest Rate by 50 Basis Points to 26.75%

The Monetary Policy Committee of the Central Bank of Nigeria (CBN) has increased the interest rate from 26.25% to 26.75%, a 50 basis point increase.

This was declared at the conclusion of the 296th MPC meeting of the apex bank, which was held in Abuja, by Mr. Olayemi Cardoso, the governor of the CBN.

Additionally, the MPC fixed the Cash Reserve Ratio (CRR) at 14% for merchant banks and 45% for deposit money institutions.

Thirty percent was the fixed liquidity ratio. Additionally, the apex bank changed the asymmetric corridor surrounding the MPR from +100 to –300 basis points to +500 and –100 basis points.

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Speaking on the reason for the 50-basis point hike, Mr. Yemi Cardoso, Chairman of the Monetary Policy Committee (MPC), noted recent events in the economy, such as inflation and the need to stabilize the foreign exchange market, as a rationale for the increase.

He further referenced recent policies of the federal government to import specific staple foods such as rice, maize, and wheat to help stem the rising food inflation but warned that the timeline should be followed in order not to stifle the gains made in local food production.

Additionally, Mr. Cardoso praised the convergence between the official exchange rate and that of the parallel market as part of efforts to reduce arbitrage in that sector.