CBN Raises Interest Rate To 22.75%

The Central Bank of Nigeria, CBN has raised its benchmark interest rate, the Monetary Policy Rate MPR to 22.75 per cent.

This represents 400 basis points from the current 18.75 percent.

CBN Governor, Mr. Olayemi Cardoso disclosed this at the end of the Monetary Policy Committee, MPC meeting held in Abuja today.

Cardoso said that the asymmetric corridor around the MPR was adjusted to +100 – 700 basis points from + 100 -300 basis points.

“The Cash Reserve Ratio (CRR) was increased from 32.5 per cent to 45 per cent, while the Liquidity Ratio was retained at 30 per cent.

“The committee decisions is centred around the current inflationary and exchange rate pressures, projected inflation, and rising inflation expectations.

“Members are concerned about the persistent rise in the level of inflation and emphasised the committee’s commitment to reverse the trend as the balance of risk leans towards rising inflation.

”The committee, however, acknowledged the tradeoff between the pursuit of output growth and taming inflation but was convinced that an enduring output expansion is possible only in environment of low and stable inflation,” he said.

Recall that in 2023, Nigeria’s MPC implemented a strategy of gradually increasing the MPR over four consecutive meetings.

Other important indices, such the Cash Reserves Ratio (CRR) and Liquidity Ratio, stayed constant throughout the time despite these aggressive efforts, with the CRR remaining at 32.5 percent and the Liquidity Ratio at 30.0 percent