CBN raises interest rate to 22.75%

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has announced a significant increase of four hundred basis points in the Monetary Policy Rate (MPR), elevating it from 18.75 percent to 22.75 percent. Governor Yemi Cardoso conveyed this decision following the inaugural MPC meeting of the year held in Abuja on Tuesday.

Cardoso, who chairs the MPC, disclosed, “All 12 members of the committee decided to further tighten monetary policy by raising the MPR by 400 basis points to 22.75 percent from 18.75 percent. Adjust the asymmetric corridor around the MPR to +100 to -700 from plus 100 to -300 basis points.”

The MPR had remained at 18.75 percent since the preceding MPC meeting conducted between July 24th and 25th, 2023. With inflation standing at 29.90 percent, Cardoso emphasized that the heightened MPR is a strategic measure to address the country’s inflationary challenges.

Additionally, Cardoso announced adjustments to other key parameters, stating that the Cash Reserve Ratio (CRR) has been increased to forty-five percent, while the liquidity ratio remains unchanged at thirty percent.

Providing insights into the cryptocurrency landscape, the CBN governor mentioned that over $26 billion had flowed through the Binance Nigeria crypto app in the past four years. He highlighted concerns about the inability to adequately identify the sources and users contributing to this substantial financial flow.

Amidst economic challenges leading to protests in various parts of Nigeria, Cardoso defended himself and his team against accusations of contributing to the country’s economic difficulties. Responding to inquiries on how the CBN plans to address the prevailing economic hardships, Cardoso asserted, “I laugh at that question, but it’s not a laughing matter, and I think it is very important for Nigerians to understand that the Central Bank Governor — I and my team — are not responsible for the woes that we have today; we are part of the solution.” He emphasized the determination to navigate the crisis and restore confidence, stating that the efforts made are gradually rebuilding trust and confidence in the nation’s economic landscape.