The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has announced a significant hike in the benchmark interest rate, raising it by 200 basis points to 24.75 percent. This decision was revealed in a communique issued on Tuesday by CBN Governor Yemi Cardoso following the second MPC meeting of his tenure in Abuja.
This adjustment marks a notable increase from the previous rate of 22.75 percent, signaling the second rate hike by the current committee. While the MPC opted to maintain the Cash Reserve Ratio (CRR) of deposit money banks at 45 percent, it adjusted the CRR of merchant banks from 10 percent to 14 percent. Additionally, the committee retained the liquidity ratio at 30 percent.
Governor Cardoso emphasized that the committee’s considerations centered on addressing current inflationary pressures and ensuring sustained exchange stability. With Nigeria’s inflation rate reaching 31.70 percent in February, the MPC attributes much of this inflationary trend to a surge in food prices. Consequently, the committee views tackling food insecurity as paramount in mitigating inflationary pressures.
In light of ongoing efforts to combat rising inflation, the MPC lauded the Federal Government’s initiatives aimed at addressing food insecurity, including the distribution of palliatives.
Tuesday’s MPC decision coincides with recent developments concerning the Nigerian authorities’ scrutiny of cryptocurrency platform Binance. While acknowledging the collaboration between the CBN and other government agencies in this regard, Governor Cardoso clarified that the regulation of cryptocurrency falls under the jurisdiction of the Security and Exchange Commission (SEC), not the CBN.
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