The Central Bank of Nigeria’s (CBN) Monetary Policy Committee raised the benchmark interest rate by 400 basis points to a record 22.75%.
The CBN Governor, Olayemi Cardoso, announced this while reading the communiqué from the first MPC meeting of the year on Tuesday in Abuja.
Addressing journalists at the end of the two-day meeting in Abuja, Cardoso said the committee resolved to alter the asymmetric corridor around the MPR to +100 to -700 from +100 to -300 basis points and enhance the cash reserve level from 32.5 per cent to 45 per cent.
He said, “All 12 members of the committee decided to further tighten monetary policy by raising the MPR by 400 basis points to 22.75 per cent from 18.75 per cent. Adjust the asymmetric corridor around the MPR to +100 to -700 from plus 100 to -300 basis points.
“The committee also raised the cash reserve ratio from 32.5 per cent to 45 per cent while retaining the liquidity ratio at 30 per cent.”
At its most recent meeting in July 2023, the MPC, led by the CBN’s former acting governor, Folashodun Shonubi, raised the monetary policy rate by 25 basis points to 18.75 per cent, up from 18.5 per cent in May of last year.
The capital requirement ratio remained at 32.5%, while the liquidity ratio was at 30%.
Since then, the MPR has increased from 13% in May 2022 to 18.75% in July 2023, when the latest MPC was conducted.
Analysts’ forecasts had been variable leading up to the first MPC meeting, but the new rate exceeded all financial experts’ projections.
According to a Reuters poll published on Friday, Nigeria is anticipated to adopt two aggressive interest rate hikes in less than two months to contain inflation and boost the currency, following a few missed monetary policy sessions.
It stated that the policy rate is projected to rise by 225 basis points to 21.00 per cent, despite the local currency still trading around a record low on the black market.
President Bola Ahmed Tinubu has stated that interest rates need to be decreased to increase investment and consumer spending, which would help to keep the economy growing.
