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CBN hikes interest rate to 26.25 % amid high inflation

CBN office | File Image

By Stella Woke


The future of businesses in Nigeria looks bleak as the Central Bank of Nigeria (CBN) raises the interest rate by 150 basis points from 24.75 per cent to 26. 25 per cent.

After a two-day meeting, the bank’s Monetary Policy Committee (MPC) agreed to increase the Monetary Policy Rate (MPR) for the third straight time to rein in the country’s soaring inflation levels pegged at 33.69% in April 2024.

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The CBN Governor, Yemi Cardoso, who is also the MPC chairman, disclosed this on Tuesday.

He said, “The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) held its 295th meeting on the 20th and 21st of May 2024 to review recent economic and financial developments and assess risks to the outlook.

“Decisions of the MPC. The committee’s decisions are as follows: 1. Raise the MPR by 150 basis points to 26. 25 per cent from 24.75 per cent.”

 Cardoso, however, further explained that the Cash Reserve Ratio (CRR) of Deposit Money Banks (DMBS) was retained at 45 per cent.

“The MPC also put the Asymmetric Corridor around the MPR at +100 and –300 basis points. It retained the liquidity ratio at 30 per cent,” he said.

The CBN chief, who admitted the rising inflation levels in the country, said that the key focus of the MPC meeting was to achieve price stability by using tools available to rein in inflation.

He said that the inflation pressure was being driven largely by food inflation, citing rising costs of transportation, infrastructure challenges, insecurity, and exchange rate issues as some of the factors affecting it.

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