CBN Raises Interest Rate to 27.25% to Tackle Inflation

The Central Bank of Nigeria (CBN) has once again raised its Monetary Policy Rate (MPR), this time by 50 basis points to 27.25%. This marks the fifth consecutive increase this year as part of ongoing efforts to curb rising inflation and stabilize the nation’s economy. The decision was announced on Tuesday during the Monetary Policy Committee (MPC) meeting led by CBN Governor, Olayemi Cardoso.

This latest hike follows a previous significant adjustment in July 2024, when the MPR was raised by 800 basis points to 26.75%, up from 13% in May 2022. Additionally, the CBN raised the Cash Reserve Ratio (CRR) by 500 basis points, bringing it to 50% from the previous 45%.

Addressing the outcome of the two-day MPC meeting held in Abuja, Governor Cardoso confirmed that while the MPR saw an increase, other parameters would remain unchanged. The asymmetric corridor around the MPR stays at +100/-300 basis points, the CRR at 45%, and the liquidity ratio (LR) at 30%.

Despite many analysts anticipating a pause in rate hikes due to easing inflationary pressures and increased foreign inflows, the CBN opted for another increase, signaling its commitment to tackling inflation head-on.