CBN Raises Benchmark Interest Rate by 50bps to 27.25%

The Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC) has raised the benchmark interest rate in the country by 50 basis points to 27.25%, the fifth hike since February 2024.

CBN Governor Olayemi Cardoso disclosed this during a press briefing at the end of 297th MPC in Abuja completed on Tuesday.

Also, he announced that the Cash Reserve Ratio (CRR) was raised by 50 basis points from 45% to 50% for Deposit Money Banks (DMBs) and from 14% to 16% for Merchant Banks.

In addition, the committee retains the Liquidity Ratio (LR) at 30% and Asymmetric Corridor at +500/-100 basis points around the MPR.

The development comes as the country’s inflation rate eased for the second consecutive month in August to 32.15%, according to the National Bureau of Statistics (NBS).

Recall that at its last MPC meeting in July 2024, the apex bank raised the interest rate to 26.75%.

This is coming five days after the United States Federal Reserve announced a significant 0.5% cut to its interest rate, the first time since July 2023.

Economist and Executive Director of the Centre for the Promotion of Private Enterprise, Muda Yusuf had urged the CBN to pause interest rate hikes as the continuous increase negatively impacts the real sector.

BUSINESS METRICS recalls that since February 2024, CBN has raised interest the rate four times – from 22.75% to 26.75%. Before the appointment of Cardoso in September last year, the country’s interest rate stood at 18.75%.