CBN Lifts Interest Rate to 24.75%

The Central Bank of Nigeria (CBN) has increased the benchmark interest rate by 200 basis points to 24.75%. This was made at the recent Monetary Policy Committee (MPC).

This was made during the Tuesday communique by the CBN governor, Yemi Cardoso; this is said to be the second MPC meeting of his tenure in Abuja.

The new interest rate reveals a hike from the 22.75% announced by the MPC about a month ago, the second rate hike by the current committee.

Cardoso stated that deposit money banks would maintain a 45% Cash Reserve Ratio (CRR). The MPC also changed merchant banks' CRR from 10% to 14%. While the committee retained the liquidity ratio at 30%.

"The committee's considerations at this meeting focused on the current inflationary pressures, the need to anchor inflation expectations, and the need to ensure sustained exchange stability," the CBN chief said.

He announced that the current move is part of efforts to address the country's rising inflation rate, which was 31.70% in February.

Cardoso stated that MPC members think rising food prices are the primary cause of the nation's headline inflation, but they are not. 

"The committee, therefore, was of the view that addressing food insecurity is key to containing the current inflationary pressures," he said while commending the Federal Government's efforts at curbing food insecurity, including distributing palliatives.

Speaking about the clampdown on cryptocurrency, he said that the CBN, in cooperation with other government agencies, is not producing results, even though he gave an update on Nigeria's crackdown on the cryptocurrency platform.

"We consider ourselves having the wherewithal to collaborate with other government agencies, which is a very important function. About a month ago, we collaborated with law enforcement agencies, the EFCC, the SEC, and other regulatory bodies, and what came out of that is a work in progress, but very positive as far as I can say," he said.

"The NSA, we've been sharing information. However, in this case, the responsibility for regulating cryptocurrency is not our role; it is strictly that of the Security and Exchange Commission, not our responsibility."

However, the next MPC meeting is expected to be held between May 20th and 21st, 2024.