CBN raises benchmark interest rate to 27.25%

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has unanimously voted to increase the benchmark interest rate, or Monetary Policy Rate (MPR), to 27.25%

This decision aims to further tighten monetary policy, according to CBN Governor Olayemi Cardoso, who addressed journalists after the committee’s fifth meeting for the year in Abuja.

According to Punch, the new rate represents a 50 basis point increase from 26.75% announced in July 2024 and an 8.5% increase under the current leadership.

CBN Governor Olayemi Cardoso explained that the committee was unanimous in its decision to further tighten policy, leading to the rate increase.

The asymmetric corridor around the MPR remains unchanged at +500 to -100 basis points.

Additionally, the Cash Reserve Ratio for deposit money banks has been raised by 500 basis points to 50%, and for merchant banks by 200 basis points to 16%, while the liquidity ratio remains at 30%.

The rate hike comes despite expectations of a hold or decrease, given two consecutive months of declining headline inflation. This move underscores the CBN’s commitment to maintaining economic stability.

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