CBN Raises Interest Rate From 18.75% to 22.75% 

The Monetary Policy Committee of the Central Bank of Nigeria (CBN) has raised the monetary policy rate (MPR), which benchmarks interest rates, from 18.75 percent to 22.75 percent.

The rate adjustment was announced by CBN Governor Olayemi Cardoso at a news conference on Tuesday following the committee’s meeting in Abuja.

The MPR is an economy’s baseline interest rate, upon which all other interest rates are built.

The rate hike is the committee’s first monetary policy decision since Cardoso took office on September 26, 2023.

Speaking to journalists, the CBN governor stated that the committee increased the MPR by 400 basis points to 22.75 percent and changed the asymmetric corridor at +100 and -700 basis points from +100 basis points to +300 basis points around the MPR.

He stated that the committee also raised the cash reserve ratio (CRR) from 32.5 percent to 45 percent, while keeping the liquidity rate at 30.0 percent.

Speaking of inflation, Cardoso stated that the rate of change in the prices of goods and services increased to 29.9 percent in January 2024, up from 28.92 percent the previous month.

According to the CBN governor, the increase in inflation is caused by major factors such as rising energy costs, high fiscal deficits, and persistent security challenges in major food-producing areas.

“In addition, global factors such as tight financial conditions, and trade disruptions from ongoing geopolitical tensions remain significant upside risks to the outlook for domestic inflation. Forecasts, therefore, indicate that inflation will remain on an upward trajectory in the near term, before commencing a descent,” he said.

He stated that the committee will continue to implement measures to boost investor confidence and attract capital inflows, as well as monitor global and domestic economic developments to ensure that inflationary and exchange rate pressures moderate in the near term.

Cardoso also stated that the next MPC meeting will be held on March 25 and 26.