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CBN increases interest rate by 200 basis points to 24.75 percent

Dr. Olayemi Cardoso, Governor of CBN

*The Monetary Policy Committee of the Central Bank of Nigeria raises the interest rate to 24.75 percent from 22.75 percent, which the MPC announced earlier this year

Isola Moses | ConsumerConnect

The Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC) has increased the benchmark interest rate by 200 basis points to 24.75 percent.

Dr. Olayemi Cardoso, Governor of CBN, disclosed this development in s communique issued Tuesday, March 26, 2024, after the second MPC meeting of his tenure in Abuja, FCT.

It is noted that the new interest rate has risen from the 22.75 percent, which the MPC announced earlier this year.

It is the second rate hike by the committee in two months.

Cardoso also announced the retention of the Cash Reserve Ratio (CRR) of the country’s Deposit Money Banks (DMBs) at 45 percent.

The MPC, however, adjusted the CRR of merchant banks from 10 percent to 14 percent.

The Committee retained the liquidity ratio at 30 percent in the economy.

The Governor of CBN said: “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.”

Impact of food inflation on  cost of living

Cardoso also explained the moves are part of efforts at combating the rising inflationary rate which was pegged at 31.70 percent February this, in the West African country.

According to him, the MPC members believe the headline inflation in the country is triggered mostly by a hike in the cost of food.

He stated: “The Committee, therefore, was of the view that addressing food insecurity is key to containing the current inflationary pressures.”

The CBN Chief commended the Federal Government’s efforts at curbing food insecurity including the distribution of palliatives in Nigeria.

The next MPC meeting will be held May 20-21 this year, said the Bank.

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