CBN raises interest rates to 24.75 percent.
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) increased the benchmark interest rate by 200 basis points to 24.75 percent.
This is according to a Tuesday communiqué issued by CBN Governor Yemi Cardoso during the second MPC meeting of his tenure in Abuja.
The new interest rate is higher than the 22.75 percent declared by the MPC approximately a month ago and marks the current committee’s second rate hike.
Cardoso announced that deposit money banks’ cash reserve ratio (CRR) would remain at 45 percent. However, the MPC raised the commercial banks’ CRR from 10% to 14%.
The committee also maintained the liquidity ratio at 30%.
#CBNMPC boosts MPR by 200 basis points to 24.75% from 22.75%. pic.twitter.com/hJCD8douCB
Central Bank of Nigeria (@cenbank), March 26, 2024.
“The committee’s thoughts at this meeting centred on present inflationary pressures and the need to underpin inflation expectations while also ensuring long-term exchange stability,” the CBN head added.
He stated that the steps are part of efforts to curb the country’s growing inflation rate, which was recorded at 31.70 percent in February.
Cardoso stated that MPC members feel that rising food costs are the primary cause of headline inflation in the country.
“The committee consequently was of the opinion that resolving food insecurity is crucial to limiting the current inflationary pressures,” he stated, praising the Federal Government’s efforts to combat food insecurity, including the distribution of palliatives.
The MPC decision on Tuesday came as Nigerian officials clamped down on cryptocurrency site Binance.
Some Binance executives were imprisoned in the nation, while one just evaded detention.
However, while presenting an update on Nigeria’s crackdown on the cryptocurrency platform, he stated that the CBN’s coordination with other government authorities is producing results.
“We believe we have the ability to interact with other government entities, which is an extremely essential function for us. We did collaborate with law enforcement authorities, the EFCC, the SEC, and other regulatory bodies about a month ago, and what came out of that is still a work in progress, but it has been extremely constructive, as far as I can tell.”
“With the NSA, we’ve been sharing information. However, in this scenario, the obligation for regulating cryptocurrencies is solely that of the Securities and Exchange Commission, not ours.”
The next MPC meeting will take place on May 20 and 21, 2024.