The Monetary Policy Committee of the Central Bank of Nigeria (CBN) has voted to increase the monetary policy rate.
This measures the benchmark interest rate, to 27.25 per cent.
The monetary policy rate is the baseline interest rate in an economy. Every other interest rate used within an economy is built on the MPR.
However, while speaking to newsmen at a press briefing after the committee’s fifth meeting for the year at the CBN headquarters on Tuesday in Abuja, the governor of the apex bank, Olayemi Cardoso, said the committee members unanimously decided to further tighten monetary policy.
This new rate is an increase of 50 basis points from 26.75 per cent announced by the apex bank in July 2024.
MPR Raise
Furthermore, the new rate reflects an 8.5 per cent increase in interest rates under the current leadership, which took office a year ago, Cardoso said.
“The committee was unanimous in its decision to further tighten policy and thus decided as follows, one: raise the MPR to 27.25 per cent.”
However, the MC retained the asymmetric corridor around the MPR at +500 to -100 basis points and raised the Cash Reserve Ratio of deposit money banks by 500 basis points to 50% and merchant banks by 200 basis points to 16 per cent from 14 per cent and retain the liquidity ratio at 30 per cent.
“The MPC decided to retain the asymmetric corridor around the MPR at plus 500 to minus 100 basis points.
Also Read: CBN: Naira Dropped By 51.5% Against Dollar In One Year Under Cardoso
It also raised the Cash Reserve Ratio of deposit Money banks by 500 basis points to 50 per cent from 45% and merchant banks by 200 basis points to 16% from 14 per cent and retained the liquidity ratio at 30%, Cardoso said.
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