CBN Raises Interest Rate to 27.25% in Fifth Consecutive Hike

The Central Bank of Nigeria (CBN) has once again raised the country’s interest rate, bringing it up by 50 basis points to 27.25%. This marks the fifth consecutive hike since February 2024, as part of the Monetary Policy Committee’s (MPC) ongoing efforts to stabilize the economy.

The CBN Governor, Olayemi Cardoso, made the announcement during a press briefing following the conclusion of the 297th MPC meeting held in Abuja on Tuesday. In addition to the interest rate increase, Cardoso revealed other key policy adjustments, including a 50 basis points rise in the Cash Reserve Ratio (CRR), which now stands at 50% for Deposit Money Banks (DMBs) and 16% for Merchant Banks. Meanwhile, the Liquidity Ratio (LR) remains at 30%, with the Asymmetric Corridor maintained at +500/-100 basis points around the Monetary Policy Rate (MPR).

The rate hike comes as Nigeria experiences a slight easing in inflation, which dropped to 32.15% in August 2024, according to the National Bureau of Statistics (NBS). This marks the second consecutive month of reduced inflation figures.

At the previous MPC meeting in July 2024, the interest rate was raised to 26.75%. Since February, the central bank has steadily increased rates in response to rising economic pressures. Before Olayemi Cardoso’s appointment as CBN Governor in September last year, Nigeria’s interest rate stood at 18.75%.

This decision follows a significant move by the United States Federal Reserve, which recently announced a 0.5% cut to its interest rate, the first reduction since July 2023. Economic experts, including Muda Yusuf, Executive Director of the Centre for the Promotion of Private Enterprise, have previously called on the CBN to reconsider its strategy of continuous rate hikes.

However, the apex bank’s decision signals a continued commitment to curbing inflationary pressures and stabilizing the national economy.