The Central Bank of Nigeria has further raised the Monetary Policy Rate to 24.75 per cent, a decision influenced by the rising inflation in Africa’s biggest economy.
The apex bank took the hawkish stance on Tuesday at the 294th Meeting of the Monetary Policy Committee in Abuja.
In the February MPC meeting, the committee unanimously voted to raise the benchmark interest rate to 22.75 per cent considering surging inflation.
Experts had predicted another interest rate hike after inflation rose to 31.7 per cent in February up from 29.90 percent in January of 2024.
The CBN Governor Olayemi Cardoso, who dumped the unorthodox monetary policy approach of his predecessor, Godwin Emefiele, has been battling a depreciating naira, unstable foreign exchange reserves and inflation.
He said on the latest decision, “The decision of the MPC are as follows, to raise MPR 200 basis points to 24.75 from 22.75 per cent. Adjust the asymmetric corridor along the MPR at +100/300 basis point to -300 basis points. To maintain a cash reserve ratio of DMB at 45 per cent.
“Adjust the cash reserve ratio of merchant banks from 10 per cent to 14 per cent and retain the liquidity ratio at 30 per cent.”
Cardoso said the focus of the consideration was on the rising inflation, the need to anchor inflation expectations and ensure exchange rate stability.
Nigeria’s money supply hit a historic N95.56 trillion in Feb 2024 despite MPC’s tightening stance
Cardoso also said the decisions by the committee was to contain the money supply which has also contributed to inflation.