The Central Bank of Nigeria (CBN) raised its Monetary Policy Rate (MPR) by 50 basis points on Tuesday, bringing the benchmark interest rate to 27.25%. This marks the fifth consecutive rate hike this year.
Following a two-day Monetary Policy Committee (MPC) meeting in Abuja, CBN Governor Olayemi Cardoso announced the decision by the 11 committee members to increase the rate. The move aims to further curb inflationary pressures despite signs of moderating inflation.
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In addition to the MPR hike, the CBN also raised the Cash Reserve Ratio (CRR) for commercial banks by 500 basis points to 50 per cent, up from 45 per cent. Merchant banks saw a smaller increase, with their CRR raised by 200 basis points to 16 per cent, up from 14 per cent.
The CBN retained the asymmetric corridor around the MPR at +500/-100 basis points while keeping the liquidity ratio unchanged at 30 per cent.
While many analysts had predicted a pause in rate hikes due to easing inflation, the CBN opted for further tightening to ensure inflation remains under control. This also suggests that the country is in deep economic troubles, notwithstanding the new hopes from Nigerians towards the news of the country exporting diesel soon.
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