The Monetary Policy Committee of the Central Bank of Nigeria on Tuesday announced another increase in the country’s Monetary Policy Rate known as the baseline interest rate, to 26.75 per cent from 26.25 per cent.
The MPC also adjusted the asymmetric corridor to +500/-100 basis points from +100/-300 basis points around the MPR.
The CBN Governor, Yemi Cardoso, made this known on Tuesday in Abuja, while presenting the communiqué from the 296th meeting of the MPC.
According to him, the decision to further increase the interest rate is to tackle the country’s rising core inflation and food inflation which stood at 34.19 per cent and 40.87 per cent, respectively in June.
He said members of the MPC are not oblivious of the need to address the rising prices of food in Nigeria, necessitating the interest rate hike.
All other monetary parameters remained unchanged. That is the Cash Reserve Ratio, remains at 45 percent for commercial banks and 14 percent for merchant banks. Similarly, the Liquidity ratio remained at 30 percent and the Asymmetric corridor stood at +500/100.
The implication of the interest rate hike is that businesses, farmers, manufacturers and investors will have to pay more to get loans from banks.
The 296th MPC meeting is the fourth time the interest rate has been increased since the appointment of Cardoso in September last year.
Recall that in May 2023, when President Bola Tinubu was inaugurated, Nigeria’s interest rate stood at 18.75 per cent while inflation rate stood at 22.41 per cent.
Meanwhile, despite CBN’s continued interest rate hikes, the country’s inflation has not cooled off.
Earlier analysts had called for a pause in the hike of the interest rate.
The Director of the Centre for Promotion of Private Enterprise, Muda Yusuf, called for a pause in the hike of the interest rate.
According to him, the monetary instruments have been overstretched, hence not productive.
“I think we have overstretched monetary instruments because of inflation. They should put a pause on interest rate hikes,” he said. With Daily Post reports
