CBN Further Hikes Interest Rate by 0.50% to 27.25%

By Adedapo Adesanya

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has decided to further raise the interest rate by 50 basis points or 0.50 per cent to 27.25 per cent from the 26.75 per cent it pushed it to at the last meeting in July.

This came as the 12-member committee of the apex bank unanimously decided to hike the rate despite back-to-back cooling in the inflation rate in the last two months.

The Governor of the CBN, Mr Yemi Cardoso, who doubles as the Chairman of the MPC, disclosed this at the end of the MPC meeting held in Abuja.

The apex bank further increased the Cash Reserve Ratio (CRR) of commercial banks by 500 basis points from 45 per cent to 50 per cent, and retained the Liquidity Ratio at 30 per cent and the Asymmetric Corridor at +500 basis points/-100 basis points.

Mr Cardoso admitted that the decision to hike the rate was rationalised by increased energy prices, adding that the committee expects that further hikes will help ease inflation further.

Inflation rose to its highest level in 28 years in June 2024 at 34.19 per cent. However, it cooled to 33.40 per cent in July and further eased to 32.15 per cent in August 2024 due to an improvement in food supply influenced by the harvest season.