The Central Bank of Nigeria (CBN) has announced a significant hike in the benchmark interest rate, raising it by 200 basis points to 24.75 percent.
The decision was reached during the second Monetary Policy Committee (MPC) meeting under the tenure of CBN Governor Yemi Cardoso in Abuja.
In a communique issued on Tuesday, Cardoso emphasized the necessity of the rate adjustment, citing ongoing inflationary pressures and the imperative to anchor inflation expectations while ensuring sustained exchange rate stability.
The move marks the second rate hike by the current committee, following the previous adjustment from 22.75 percent.
While the Cash Reserve Ratio (CRR) for deposit money banks remains unchanged at 45 percent, the MPC adjusted the CRR for merchant banks, increasing it from 10 percent to 14 percent.
Additionally, the committee opted to retain the liquidity ratio at 30 percent.
Cardoso underscored the committee’s concern regarding the country’s escalating inflation rate, which reached 31.70 percent in February, primarily attributed to rising food costs.
He emphasized the critical importance of addressing food insecurity as a key strategy to mitigate current inflationary pressures, commending the Federal Government’s efforts in this regard, including the distribution of palliatives.
The MPC’s decision comes amidst the Nigerian government’s recent actions against cryptocurrency platform Binance, with several executives detained in the country.
While providing an update on the situation, Cardoso highlighted the collaborative efforts between the CBN and other government agencies, including the Economic and Financial Crimes Commission (EFCC) and the Securities and Exchange Commission (SEC).
He clarified that cryptocurrency regulation falls under the purview of the SEC, emphasizing the CBN’s role in information sharing and collaboration.
Looking ahead, the next MPC meeting is scheduled for May 20th and 21st, 2024, as the CBN continues its efforts to navigate the country’s economic landscape amidst evolving challenges.