JUST IN: CBN Raises Interest Rate to 26.75% Amid Untamed Inflation

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has increased the benchmark lending rate to 26.75%.

The hike in the Monetary Policy Rate was disclosed by the Governor of the CBN, Olayemi Cardoso, at the end of the 296th MPC meeting in Abuja on Tuesday.

The MPC had maintained a hawkish stance to tame inflation since it resumed meeting this year and thus far, it has hiked rate by more than 500 basis points.

The rate was raised to 26.25% in May.

However, with inflation moving to 34.19% in June, according to the National Bureau of Statistics (NBS), the headline inflation increased by 0.24% relative to the May 2024 headline inflation rate which was 33.95%.

On a year-on-year basis, the headline inflation rate was 11.40% points higher than that of June 2023 (22.79%).

Also, on a month-on-month basis, the headline inflation rate in June 2024 was 2.31%, which was 0.17% higher than the rate recorded in May 2024 (2.14%) meaning that the rate of increase in the average price level was higher in June than in May.

Repeatedly, the CBN governor has maintained that the MPC members were committed to price stability and were willing to keep tightening until inflation is tamed.

Multiple reports from investment houses had projected that the MPR would be hiked,

Cowry Asset Management, in its weekly report, projected a 25bps to 50bps hike in interest rates, while the Meristem report anticipates “a 100 basis point increase in the monetary policy rate to 27.25% while likely keeping other parameters unchanged. Overall, we anticipate that the committee will prioritize inflation control and capital inflow sustainability, crucial for maintaining a stable exchange rate system, and accordingly, implement a rate hike to achieve these objectives.”