September 24, (THEWILL) – The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has further raised the benchmark interest rate by 50 basis points from 26.75 percent to 27.25%.
CBN Governor, Olayemi Cardoso, who disclosed this to journalists at the end of the two-day 297th Monetary Policy Committee (MPC) meeting in Abuja on Tuesday, said the decision was to further tame inflation.
The apex bank also raised Cash Reserve Ratio (CRR) for Deposit Money Banks (DMBs) by 50 basis points from 45% to 50% and from 14% to 16% for Merchant Bank
Cardoso said members of the MCP, however, agreed to hold other parameters unchanged.
“The Monetary Policy Committee (MPC) voted to raise Monetary Policy Rate (MPR) by 50 basis points from 26.75% to 27.25%; raise Cash Reserve Ratio (CRR) by 50 basis points from 45% to 50% for Deposit Money Banks (DMBs) and from 14% to 16% for Merchant Banks. The committee retains the Liquidity Ratio (LR) at 30% and Asymmetric Corridor at +500/-100 basis points around the MPR”, he said.
The apex bank had at its 296th MPC meeting held on July 22 and 23, raised the monetary policy rate (MPR), which benchmarks interest rates, from 26.25 percent to 26.75 percent – an increase of 50 basis points. It also adjusted the asymmetric corridor at +500 basis points and -100 basis points around the MPR, while the cash reserve ratio (CRR) was retained at 45 percent, and the liquidity ratio at 30 percent.
The benchmark interest rate, also called the monetary policy rate (MPR), determines the cost of borrowing in the economy. It can be considered the interest rate the CBN uses to lend to banks who then lend to customers at a higher rate.
Stakeholders had raised concerns and warned the CBN against further hikes in interest rates.
Cardoso had said in July that the decision to raise the benchmark interest rate was an aggressive attempt to tame the persistent rise in food inflation and the nation’s headline inflation rate.
