The Central Bank of Nigeria (CBN) on Tuesday raised its benchmark interest rate by 150 basis points to 26.25 per cent – the third straight hike this year. According to the apex bank, it is to control the rising prices of goods and services and to ensure stability of the naira.
After the two-day Monetary Policy Committee (MPC) meeting in Abuja, the members agreed to hold other parameters unchanged. Consequently, the CBN retained the asymmetric corridor around the MPR at +100/-300 basis points, cash reserve ratio (CRR) at 35 per cent, and retained the liquidity ratio (LR) at 30 percent.
The CBN, Olayemi Cardoso, announced this in Abuja after the meeting. Most analysts have anticipated a 100 basis point increase in the Monetary Policy Rate (MPR) to rein in inflationary pressure.
The CBN’s move has satisfied the taste of investors for attractive yield but put borrowing costs high for the real sector and the small and medium enterprises (SMEs).
“We now expect the Central Bank of Nigeria to raise its policy rate by 100bps to 25.75 percent at its May MPC meeting (previously, on hold),” Razia Khan, managing director, Chief Economist, Africa and Middle East Global Research, Standard Chartered Bank, said.
Recall that on February 27, 2024, the CBN Monetary Policy Committee raised the benchmark interest rate by 400 basis points to a record 22.75%.
CBN Governor Cardoso announced this while reading the communiqué from the first MPC meeting of the year in Abuja.
