The Central Bank of Nigeria (CBN) has announced an increase in the interest rate to 22.75%. This adjustment was disclosed following the conclusion of the Monetary Policy Committee (MPC) meeting, which spanned two days. The session, which took place between Monday and Tuesday, aimed at reviewing the nation’s economic landscape and implementing measures to stabilize it.
The adjustment in the interest rate comes against a significant spike in the country’s annual inflation rate, which, as the National Bureau of Statistics reported, surged to 29.90% in January, up from 28.92% in December 2023. This rise is primarily attributed to a continuous uptick in food prices, underlining the urgent need for monetary policy interventions to curb inflationary pressures.
Policy measures and economic outlook
During the MPC meeting, Olayemi Cardoso, the governor of the CBN, revealed that alongside the interest rate hike, the committee decided to maintain the Cash Reserve Ratio (CRR) at 45% and the Liquidity Ratio at 30%. These decisions underscore the committee’s strategy to foster a stable economic environment conducive to attracting capital inflows and boosting investor confidence. Cardoso emphasized the committee’s commitment to closely monitor both global and domestic economic developments to ensure that inflationary and exchange rate pressures are moderated in the near term.
The committee also acknowledged the influence of non-monetary factors on the country’s inflation, such as persisting security challenges and infrastructure deficits. It highlighted the critical role of fiscal policy in addressing these issues and pledged continued monetary policy support to complement these efforts. The MPC applauded various fiscal policy initiatives aimed at mitigating the cost of living, including efforts to increase food supply and implement civil service reforms to enhance government efficiency.
Future directions and committee’s commitment
Looking ahead, Cardoso announced that the next MPC meeting is scheduled for 25 and 26 March, indicating the committee’s ongoing dedication to navigating the economy through its current challenges. The recent confirmation of the 12-member committee, headed by Cardoso himself by the Senate on 22 February, marks a renewed mandate to steer the nation’s economic policies.
In his remarks, Cardoso also reflected on the impact of previous MPC meetings on the economy. He expressed confidence that the committee’s decisions would complement fiscal policies, thereby steering the economy towards a more favorable direction.
