CBN Increases Interest Rate to 24.75 Percent

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The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has raised the benchmark interest rate by 200 basis points to 24.75 percent.

This was announced in a Tuesday communique by CBN Governor Yemi Cardoso after the second MPC meeting of his tenure in Abuja.

Meanwhile,This marks the second rate hike by the current committee and represents a notable increase from the 22.75 percent rate announced about a month ago.

While the MPC opted to maintain the Cash Reserve Ratio (CRR) of deposit money banks at 45 percent, adjustments were made to the CRR of merchant banks, which saw an increase from 10 percent to 14 percent.

Additionally, the committee chose to retain the liquidity ratio at 30 percent.

The decision to raise the interest rate stems from the committee’s focus on addressing current inflationary pressures and ensuring sustained exchange stability. With Nigeria’s inflation rate reaching 31.70 percent in February, the MPC acknowledges the role played by the rising cost of food in driving headline inflation.

Highlighting the importance of tackling food insecurity, Governor Cardoso emphasized the need for concerted efforts to contain inflationary pressures. He commended the Federal Government’s initiatives in this regard, including the distribution of palliatives.

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“The committee therefore was of the view that addressing food insecurity is key to containing the current inflationary pressures,” he said while commending the Federal Government’s efforts at curbing food insecurity including the distribution of palliatives.

Amidst these economic deliberations, Nigeria has also witnessed regulatory actions targeting cryptocurrency platforms, notably Binance. Despite recent developments involving the detention of Binance executives, Governor Cardoso expressed confidence in the collaborative efforts between the CBN and other government agencies.

He underscored the ongoing collaboration with law enforcement agencies, the Economic and Financial Crimes Commission (EFCC), the Securities and Exchange Commission (SEC), and other regulatory bodies.

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“We consider ourselves as having the wherewithal to collaborate with other agencies of government and that is a very important function for us. About a month ago, we actually did have collaboration with law enforcement agencies, EFCC, the SEC, and other regulatory bodies as well, and what came out of that, is a work in progress, but very positive as far as I can say,” he said.

“The NSA, we’ve been sharing information together. However, in this particular case, the responsibility for regulating cryptocurrency is not our role, it isn’t ours; it is strictly that of the Security and Exchange Commission, not our responsibility.”

However, the CBN announced that the next MPC meeting is scheduled for May 20th and 21st, 2024.

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