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  • Saturday, June 22, 2024
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CBN raises rate for third straight time to 26.25% in defence of naira

In a persistent war against rising inflation, the Central Bank of Nigeria (CBN) on Tuesday raised its benchmark interest rate by 150 basis points to 26.25 percent, the third straight hike this year, to control the rising prices of goods and services and to ensure stability of the naira.

After the two-day Monetary Policy Committee (MPC) meeting in Abuja, the members agreed to hold other parameters unchanged. Consequently, the CBN retained the asymmetric corridor around the MPR at +100/-300 basis points, cash reserve ratio (CRR) at 45 percent, and retained the liquidity ratio (LR) at 30 percent.

Read also: MPC seen further raising interest rate to tame inflation

Olayemi Cardoso, governor of the CBN, announced this in Abuja after the meeting. Most analysts have anticipated a 100 basis point increase in the Monetary Policy Rate (MPR) to rein in inflationary pressure.

The CBN’s move has satisfied the taste of investors for attractive yield but put borrowing costs high for the real sector and the small and medium enterprises (SMEs).

“We now expect the Central Bank of Nigeria to raise its policy rate by 100bps to 25.75 percent at its May MPC meeting (previously, on hold),” said Razia Khan, managing director, Chief Economist, Africa and Middle East Global Research, Standard Chartered Bank.

Details later…

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