Again, CBN increases interest rate to 24.75%
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has decided to raise the benchmark interest rate by 200 basis points to 24.75 percent.
The decision was communicated through a communique released by CBN governor Yemi Cardoso after the second MPC meeting of his tenure in Abuja on Tuesday.
This new interest rate represents a significant increase from the 22.75 percent rate announced by the MPC just a month earlier and marks the second rate hike by the current committee.
While the Cash Reserve Ratio (CRR) of deposit money banks will remain at 45 percent, the MPC has adjusted the CRR for merchant banks from 10 percent to 14 percent.
Additionally, the liquidity ratio has been retained at 30 percent.
“The considerations of the committee at this meeting focused on the current inflationary pressures and the need to anchor inflation expectations as well as ensure sustained exchange stability,” the CBN chief said.
He said the moves are part of efforts to combat the country’s rising inflationary rate which was pegged at 31.70 percent in February.
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Cardoso noted that MPC members believe the headline inflation in the country is triggered mostly by a hike in the cost of food.
“The committee therefore was of the view that addressing food insecurity is key to containing the current inflationary pressures,” he said while commending the Federal Government’s efforts at curbing food insecurity including the distribution of palliatives.
Tuesday’s MPC decision came amid the Nigerian authorities’ clampdown on cryptocurrency platform Binance.
Some Binance executives were detained in the country but one of them recently escaped from custody.
But while providing an update about Nigeria’s clampdown on the crypto platform, he said the CBN’s collaboration with other government agencies is yielding results.
“We consider ourselves as having the wherewithal to collaborate with other agencies of government and that is a very important function for us. About a month ago, we actually did have collaboration with law enforcement agencies, EFCC, the SEC, and other regulatory bodies as well, and what came out of that, is a work in progress, but very positive as far as I can say,” he said.
“The NSA, we’ve been sharing information together. However, in this particular case, the responsibility for regulating cryptocurrency is not our role, it isn’t ours; it is strictly that of the Security and Exchange Commission, not our responsibility.”
The next MPC meeting will be held between the 20th and 21st of May, 2024.
