The Monetary Policy Committee (MPC) of the Central Bank of Nigeria has agreed to raise the monetary policy rate (MPR), which serves as the benchmark interest rate, to 27.25 percent. The monetary policy rate (MPR) is an economy's basic interest rate. Every other interest rate utilized in the economy is based on the MPR.
The CBN since February 2024, has raised interest rates four times, from 22.75% to 26.75%. before the inauguration of Olayemi Cardoso as the governor of Central Bank of Nigeria in September last year, the country's interest rate was 18.75 percent..
While addressing Newsmen at a press briefing following the committee's fifth meeting of the year at the CBN headquarters in Abuja on Tuesday, 24, September, 2024, Olayemi Cardoso, the apex bank's governor said the committee members unanimously opted to tighten monetary policy.
This new rate according to information is a 50 basis point rise from the 26.75% set by the apex bank in July 2024.
Also, the new rate reflects an 8.5 per cent 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 per cent.”
However, the Monetary Policy Committee 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 retain the asymmetric corridor around the MPR at plus 500 to minus 100 basis points. It also raised the Cash Reserve Ratio of deposit Money banks by 500 basis points to 50 per cent from 45 per cent and merchant banks by 200 basis points to 16 per cent from 14 percent and retain the liquidity ratio at 30 per cent.”
Financial experts expected the country’s Central bank to keep or decrease interest rates after two months of falling headline inflation.
This comes five days after the US Federal Reserve issued a hefty 0.5 percent interest rate drop, the first since July 2023.
