The Central Bank of Nigeria (CBN) has increased the monetary policy rate to 27.50% from 27.25%.
This decision was made during the Monetary Policy Committee’s (MPC) final meeting of the year, held in Abuja.
The CBN Governor, Olayemi Cardoso, announced that the MPC voted unanimously to raise the monetary policy rate by 25 basis points. This increase is expected to make borrowing more expensive, while also helping to control inflation and stabilize the exchange rate.
In addition to the rate hike, the CBN also decided to retain the cash reserve ratio (CRR) at 50% for deposit money banks and 16% for merchant banks.
The liquidity ratio (LR) was also retained at 30%, with an asymmetric corridor of +500/-100 basis points around the monetary policy rate.
While the CBN aims to use monetary policy rates to control inflation, it’s worth noting that previous rate hikes have failed to reduce inflation, with general inflation and food inflation experiencing increases.
