The Monetary Policy Committee of the Central Bank of Nigeria (CBN) has announced an increase in the monetary policy rate (MPR) from 22.75% to 24.75%. Olayemi Cardoso, CBN Governor, revealed this decision during the committee’s 294th meeting in Abuja, emphasizing the bank’s efforts to combat inflation.
According to Cardoso, “The committee raised the MPR by 200 basis points to 24.75 percent, and retained the asymmetric corridor at +100 basis points and -300 basis points around the MPR.” This decision comes as the second major policy move since Cardoso took office in September 2023, signaling a focused effort to manage inflation rates effectively.
The MPR serves as the baseline interest rate in the economy, influencing other interest rates and financial instruments. This adjustment follows a prior increase on February 27, which saw the rate climb to 22.75%. The CBN’s consistent tightening of monetary policy reflects its commitment to curbing inflationary trends, highlighting a proactive approach to economic management.
Speaking on the rationale behind the rate hike, Cardoso emphasized the bank’s dual objectives of managing inflation while acknowledging the impact on economic activities. He noted, “The interest rate increases are having effects, but they also contribute to a more active foreign exchange market, reducing exchange rate pressures and costs.” This multifaceted approach aims to strike a balance between containing inflation and supporting economic stability.
Additionally, Cardoso reassured stakeholders about the banking industry’s stability, emphasizing the need for continued surveillance and compliance with regulatory guidelines. The committee also urged expedited action on bank recapitalization to fortify the financial system against global risks, underscoring a holistic approach to financial sector resilience.
