CBN raises interest rate for the sixth time in 2024

Joy Agwunobi 

The Central Bank of Nigeria (CBN) has increased its Monetary Policy Rate (MPR) by 25 basis points, moving it from 27.25 per cent  to 27.50 per cent, marking the sixth consecutive hike in 2024.

The decision, aimed at curbing rising inflation, was announced by Yemi Cardoso, the CBN Governor, and Monetary Policy Committee (MPC) Chairman, following the MPC meeting in Abuja.

The hike was unanimously approved by the Monetary Policy Committee, reflecting the central bank’s continued aggressive stance on inflation control. This latest adjustment builds on a series of rate increases throughout the year, which have cumulatively raised interest rates by over 800 basis points under Cardoso’s leadership.

In addition to the rate hike, the MPC retained other monetary policy parameters: including Cash Reserve Ratio (CRR): 50 per cent for Deposit Money Banks and 16 per cent  for Merchant Banks, Liquidity Ratio (LR): 30 per cent , Asymmetric Corridor: Maintained at +500/-100 basis points around the MPR.

The MPC’s decision comes amid persistent inflationary pressures in Nigeria. According to the National Bureau of Statistics (NBS), headline inflation surged to 33.88 per cent in October 2024. This rise, coupled with increases in food and core inflation, has continued to impact price stability and the welfare of citizens.

“The meeting was held against the backdrop of renewed inflationary pressures as the headline, food, and core measures rose year-on-year in October 2024. The committee was particularly concerned that all three measures also increased on a month-on-month basis, indicating the persistence of price pressures with adverse impacts on income and citizens’ welfare. Members, therefore, agreed unanimously to remain focused on addressing price developments,” Cardoso noted.

Since Cardoso assumed leadership of the CBN, the MPC has taken an assertive approach to tackling inflation. The year began with the MPR at 18.75 per cent, which was increased to 22.75 per cent in the first hike. Subsequent adjustments saw rates climb to 24.75 per cent , 26.25 per cent , and 26.75 per cent before reaching 27.25 per cent in September.