CBN hikes MPR by 50 basis points to 26.75%

Business a.m.

The Central Bank of Nigeria (CBN) has once again hiked its monetary policy rate (MPR), marking the 11th consecutive increase since May 2022. The MPR, which serves as a benchmark for determining interest rates in the country, was raised by 50 basis points to 26.75 percent, representing a steady increase in the cost of borrowing for businesses and individuals.

Olayemi Cardoso, the CBN governor announced the latest rate hike following the 296th Monetary Policy Committee (MPC) meeting in Abuja on Tuesday. The apex bank also adjusted the asymmetric corridor around the MPR from +100/-300 to +500/-100 basis point

In addition to the MPR adjustment, the MPC maintained its stance on the Cash Reserve Ratio (CRR) for deposit money banks, retaining the current level at 45 percent, while setting a new rate of 14 percent for merchant banks. 

Cardoso attributed the unrelenting series of rate hikes to the stubbornly high food and core inflation in Nigeria.

Elaborating on the persistent nature of the food crisis, which had significantly impacted food supply and security, the CBN governor underscored the need for sustainable measures to improve food production and accessibility in Nigeria.

Deliberating over the nation’s economic and financial landscape, the committee weighed recent developments against potential risks and concluded that increasing interest rates was the most appropriate measure. 

Analysts, however, fear that this decision may further stifle economic growth, potentially creating a significant negative impact on job creation. 

Cardoso, addressing the heart of the matter, pointed to Nigeria’s failure to diversify its economy as a major culprit, lamenting the country’s heavy dependence on oil revenue, which has led to a lack of economic resilience.