Again, CBN Raises Interest Rate To 26.75%

BY COBHAM NSA – The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has again raised the interest rate by 50 basis point from 26.25 percent to 26.75 percent.

This is as the Committee also adjusted the symmetric corridor around the MPR from +100 and -300 to +500 and -100.

However, the MPC retained the Cash Reserve Ratio (CRR) of Deposit Money Banks (DMBs) at 45 percent and merchant banks at 14 percent

The apex Bank Governor, Mr. Olayemi Cardoso, who disclosed this at a media briefing announcing latest outcome of the just-concluded MPC meeting in Abuja, expressed optimism that despite the June 2024 uptick in inflation, prices are expected to moderate in the near term as monetary policy gains further traction in the system. 

He said the CBN’s Monetary policy measures were yielding desired results with capital import at the end of June recording $5.92 billion compared with $1.77 during the same period last year.

According to him, the high inflation was of great concern to the MPC which noted the insecurity in food-producing zones in the country and canvassed for urgent actions to address the problem.

Cardoso also said the Committee’s decision was hinged on monetary policy gaining further traction in addition to recent measures by the fiscal authority to address food inflation nationwide.

Furthermore, the MPC said though monetary policy has moderated aggregate demand, rising food and energy costs continue to exert upward pressure on price development in the country.

Cardoso said the MPC was mindful of the effect of rising prices on households and businesses and expressed its resolve to take necessary measures to bring inflation under control.

He announced that the next MPC meeting will take place on September 23 and 24, 2024.

Meanwhile, figures from the National Bureau of Statistics (NBS) indicate that Nigeria is battling one of its worst economic crises in recent times, with rising living and energy costs, sparked by the twin policies of the government’s removal of petrol subsidy and unification of the foreign exchange winders in May 2023.

The country’s inflation reached an all-time high in June, hitting 34.19 percent with food inflation also rising in June 2024 to 40.87 percent year-on-year compared to 40.66 percent recorded in May 2024, representing 15.62 percent higher than the 25.25 percent recorded in June 2023.