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CBN increases interest rate to 26.25 percent, explains factors driving inflation in economy

Dr. Olayemi Cardoso, Governor of CBN

*Dr. Olayemi Cardoso, Governor of the Central Bank of Nigeria asserts the inflation pressure in the economy is being driven largely by ‘food inflation’, noting the rising costs of transportation, infrastructure challenges, insecurity, and exchange rate issues

Isola Moses | ConsumerConnect

The Central Bank of Nigeria (CBN) has raised the interest rate by 150 basis points from 24.75 percent to 26. 25 percent.

ConsumerConnect reports the Bank’s Monetary Policy Committee (MPC), after intense engagement, agreed to increase the Monetary Policy Rate (MPR) for the third straight time to rein in the country’s soaring inflation levels pegged at 33.69% April 2024.

Dr. Olayemi Cardoso, Governor of CBN, who doubles as the Chairman of MPC, said: “The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) held its 295th meeting on the 20th and 21st of May 2024 to review recent economic and financial developments and assess risks to the outlook.

“Decisions of the MPC. The committee’s decisions are as follows: 1. Raise the MPR by 150 basis points to 26. 25 percent from 24.75 percent.”

Cardoso, however, said the Cash Reserve Ratio (CRR) of Deposit Money Banks (DMBS) was retained at 45 percent.

The MPC also put the Asymmetric Corridor around the MPR at +100 and –300 basis points. It retained the liquidity ratio at 30 per cent.

The Governor of CBN, though admitted the rising inflation levels in the country, said the key focus of the MPC meeting was to achieve price stability by using tools available to rein in inflation.

The inflation pressure is being driven largely by food inflation, citing rising costs of transportation, infrastructure challenges, insecurity, and exchange rate issues as some of the factors affecting it amid soaring prices of commodities and a rising cost of living for millions of Nigerian consumers.

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