The Monetary Policy Committee of the Central Bank of Nigeria (CBN) has voted to raise the monetary policy rate, which serves as the benchmark interest rate, to 27.25%.
The monetary policy rate is the economy’s baseline interest rate. Every other interest rate used in the economy is based on the MPR.
Addressing journalists at an ongoing press briefing following the committee’s fifth meeting of the year at the CBN headquarters in Abuja on Tuesday, the apex bank’s governor, Olayemi Cardoso, said the committee members unanimously decided to tighten monetary policy.
This new rate is an increase of 50 basis points from 26.75% announced by the apex bank in July 2024.
The new rate reflects an 8.5% increase in interest rates under the current leadership, which took office a year ago.
Cardoso said, “The committee was unanimous in its decision to further tighten policy and thus decided as follows, one: raise the MPR to 27.25%.”
However, the MPC maintained the asymmetric corridor around the MPR at +500 to -100 basis points, increased the Cash Reserve Ratio of deposit money banks by 500 basis points to 50% and merchant banks by 200 basis points to 16% from 14%, and kept the liquidity ratio at 30%.
He added, “The MPC decided to keep the asymmetric corridor around the MPR at plus 500 to minus 100 basis points.” It also increased the Cash Reserve Ratio of deposit money banks by 500 basis points to 50% from 45%, and merchant banks by 200 basis points to 16% from 14%, while maintaining the liquidity ratio at 30%.”
Financial experts expected the CBN to hold or lower interest rates after two months of falling headline inflation.
