The monetary policy committee of the Central Bank of Nigeria (CBN) has raised the monetary policy rate for the third time this year (MPR), which benchmarks interest rates, from 24.75 percent to 26.25 percent.
Gatekeepers News reports that monetary policy rate (MPR) serves as the foundation of interest rate in an economy, which banks use to set their interest rates.
The governor of CBN, Olayomi Cardosa announced the rate adjustment at a news conference on Tuesday during the committee’s 295th meeting in Abuja.
This marks the 11th consecutive rate hike since May 2022 in a bid to curb inflation.
Despite this efforts, between May 2022 and April 2024, inflation has rise. from 17.71 percent to 33.69 percent.
Cardoso said while adressing journalists that the committee retained the asymmetric corridor at +100 basis points and -300 basis points around the MPR.
He said MPC also retained the cash reserve ratio (CRR) at 45 percent for deposit money banks (DMBs) and 14 percent for merchant banks.
According to Cardosa, the liquidity ratio (LR) was left unchanged at 30 percent.
He said the reason for the hike is to tighten inflation, which he thinks is going as planned.
He said “Following an extensive review of risks and the near-term inflation outlook, the balance of risks suggests further tightening of policy to build on the benefits accrue from previous rate hikes.”
Cardoso said the primary objective of MPC during the meeting was to maintain price stability by utilizing tools available to the monetary authority to curb inflation.
