The Central Bank of Nigeria (CBN), has announced the immediate increase of interest rate from 22.75% to 24.75%. The new raise amounts to 200 basis points.
The new increase is an outcome of the Monetary Policy Committee (MPC) which took place in Abuja between Monday and Tuesday.
the Governor of the CBN, Olayemi Cardoso told journalists after the meeting that MPC voted to adjust the asymmetric corridor around the MPR at +100 to -300 basis points, while retaining the Cash Reserve Ratio (CRR) at 45% for commercial banks and adjust the CRR of merchant banks from 10 per cent to 14%.
He said:
“These considerations underscore the importance of the ECB and its commitment to the price stability mandate and the need to urgently bring inflation under control to ensure that the purchasing power of ordinary Nigerians is restored in the short to medium term
“Members noted the continued rise in headline inflation driven largely by food prices, because of supply shortages, and high cost of Logistics and Distribution. The committee, therefore, was of the view that addressing food insecurity is key to containing current inflationary pressures.
“On this note, members commended the ongoing efforts of the federal government towards addressing food insecurity. Some of these measures include the provision of various palliatives release of grains from the strategic reserves, distribution of seeds and fertilisers as well as farm implements for dry season farming. The committee therefore called for the full implementation of the federal government’s agricultural policies and programmes to improve food supply and further advised for broader fiscal consolidation, particularly on the improvements of tax collection and tax to GDP ratio.”