The Central Bank of Nigeria (CBN) has announced a significant increase in the Monetary Policy Rate (MPR) by 50 basis points, elevating it from 26.75% to 27.25%.
This decision, made during the 297th meeting of the Monetary Policy Committee (MPC) in Abuja, reflects the bank’s commitment to combating rising inflation and stabilizing the economy.
CBN Governor Olayemi Cardoso addressed the media following the meeting, emphasizing the unanimous nature of the committee’s decision.
“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% from 45% and merchant banks by 200 basis points to 16% from 14%, while retaining the liquidity ratio at 30%,” Cardoso stated.
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The increase in the cash reserve ratio signals a stricter approach to monetary policy, designed to ensure that banks hold more reserves and potentially limit their ability to lend, thereby impacting credit availability in the economy.
Financial analysts had anticipated either a hold or a reduction in interest rates, given the two consecutive months of declining headline inflation.
However, the CBN’s latest move underscores the urgency to address ongoing economic challenges.
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