UPDATED: CBN Increases Interest Rate to 27.5% Amid Rising Inflation

The Central Bank of Nigeria (CBN) raises the interest rate to 27.5%, citing surging inflation as the primary reason for the policy adjustment.

The Monetary Policy Rate (MPR) has been increased by the Central Bank of Nigeria (CBN) from 27.25 percent to 27.50 percent in an effort to address rising inflation.

This occurred after the Central Bank of Nigeria’s Monetary Policy Committee (MPC) convened. The monetary policy rate determines the standard interest rate.

CBN Governor Yemi Cardoso made this announcement on Tuesday in Abuja during the final MPC meeting of the year at the headquarters of the apex bank.

Cardoso announced that the MPC unanimously decided to increase the MPR by 25 basis points, moving it from 27.25% to 27.50%. Additionally, they opted to maintain the Cash Reserve Ratio at 50% for Deposit Money Banks and 16% for Merchant Banks.

Cardoso stated that the Committee unanimously agreed to increase the monetary policy rate by 25 basis points, bringing it to 27.50 percent.

The CBN head also mentioned that the MPC kept the Liquidity Ratio (LR) at 30% and maintained an Asymmetric Corridor of +500/-100 basis points around the MPR.

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Cardoso stated, “The meeting’s discussions took place against the backdrop of renewed inflationary pressures, with both headline food and core measures increasing year over year in October 2024. Consequently, members unanimously agreed to stay focused on addressing price developments.”

This marks the sixth occasion that the CBN has increased the interest rate since February 2024. In September, after a decrease in the country’s inflation level in August 2024, the bank raised the rate to 27.25%.

Earlier this month, the National Bureau of Statistics (NBS) reported that the country’s inflation rate increased to 33.88% in October 2024 from 32.7% in September 2024.

It showed a month-on-month increase of 1.18 percentage points. The NBS, in its Consumer Price Index (CPI), attributed this rise to increased transportation costs and higher food prices.

According to the agency, compared to the previous year, the headline inflation rate increased by 6.55 percentage points from October 2023’s figure of 27.33%.