The Central Bank of Nigeria (CBN) has again increased its Monetary Policy Rate (MPR) by 25 basis points, bringing it from 27.25% to 27.50%. This marks the sixth consecutive interest rate hike in 2024, underscoring the central bank’s aggressive stance against inflationary pressures.
Announcing the decision in Abuja, CBN Governor and Monetary Policy Committee (MPC) Chairman, Mr. Yemi Cardoso, emphasised the committee’s unanimous agreement on the rate hike. “The committee decided unanimously to further tighten monetary policies,” he stated. This adjustment is part of a comprehensive approach to address inflation, which surged to 33.88% in October 2024, according to the National Bureau of Statistics (NBS).
The year 2024 has been marked by a series of rate hikes under Governor Cardoso’s leadership, with the MPR rising from 18.75% in January to its current level of 27.50%. This represents a total increase of over 800 basis points. Notable increments included a significant jump to 22.75% early in the year, followed by steady hikes at subsequent MPC meetings.
The committee’s resolve has remained firm, reflecting concerns over the persistent rise in headline, food, and core inflation. On a month-on-month basis, these measures continue to exert pressure on household income and welfare, further justifying the tightening of monetary policy.
While the MPR saw an increase, other critical monetary tools remained unchanged. The Cash Reserve Ratio (CRR) stands at 50% for Deposit Money Banks and 16% for Merchant Banks. Similarly, the Liquidity Ratio (LR) remains at 30%, and the Asymmetric Corridor around the MPR is held at +500/-100 basis points. These consistent measures complement the overall tightening strategy, ensuring balance in the financial ecosystem.
Governor Cardoso and the MPC face a challenging macroeconomic environment, with inflation reaching its highest levels in years. The October inflation rate of 33.88% is a stark reminder of the economic hurdles ahead. Rising prices, particularly in food and core sectors, have significantly impacted household purchasing power.
“The renewed inflationary pressures have a persistent adverse impact on income and welfare,” Cardoso noted. He reaffirmed the MPC’s commitment to stabilizing prices and promoting economic growth through bold monetary decisions.
