Breaking: CBN raises interest rate to 27.25%

The Central Bank of Nigeria (CBN) has declared an additional increase in its Monetary Policy Rate (MPR), bringing it up to 27.25%.

The decision was reached on Tuesday at the Monetary Policy Committee (MPC) meeting led by CBN Governor Yemi Cardoso.

Cardoso emphasized that this step aims to enhance confidence, allowing economic participants to strategize effectively for the medium to long term.

He remarked, “The committee unanimously acknowledged that further efforts are necessary to fulfill the bank’s mandate for price stability.”

“The MPC observed that although headline inflation has decreased due to a reduction in food inflation, core inflation continues to be high, mainly due to increasing energy costs.”

The upward trend raises significant worries for members, highlighting the ongoing inflationary pressures. Consequently, they emphasized the importance of working closely with fiscal authorities to tackle the current rise in energy prices.

“The Monetary Policy Committee (MPC) observed the ongoing expansion of the money supply and acknowledged the necessity to reduce surplus liquidity in the market while also addressing the demands for foreign exchange.”

Cardoso expressed that the MPC is concerned about fiscal deficits.

Nonetheless, he affirmed that the federal government has committed to avoiding reliance on unconventional methods for monetary financing.

Members expressed their concerns regarding the increasing fiscal deficit but recognized the fiscal authority’s dedication to avoiding monetary financing through alternative methods, he stated.

Additionally, Cardoso praised the federal government for its efforts to stabilize food prices.

He noted that the committee is hopeful that “the increase in refined petroleum products from Dangote Petroleum Refinery will help lower transportation costs and greatly alleviate food price pressures in the short to medium term.”

“This is also anticipated to reduce the demand for foreign exchange needed for importing refined petroleum products, which would positively impact external reserves and enhance the overall balance of payments,” he added.

Remember that in July 2024, the Central Bank of Nigeria (CBN) increased its Monetary Policy Rate (MPR) by 800 basis points, bringing it to 26.75 percent from 13 percent in May 2022.