The Central Bank of Nigeria announced on Tuesday that it has increased the monetary policy rate by 200 basis points to 24.75 percent. This decision comes as a response to the rising inflation in the country, which is currently the most populous in Africa.
Just a month after the interest rate was raised to 22.75 percent, the central bank decided to further hike it in order to address current inflationary pressures. Yemi Cardoso, the governor of the Central Bank of Nigeria and chair of the Monetary Policy Committee, emphasized the need to anchor inflation expectations and ensure sustained exchange rate stability.
Cardoso stated, “Members of the monetary policy committee noted the continued rise in headline inflation driven largely by food prices, due to supply shortages and high costs of logistics and distribution. The committee believes that addressing food insecurity is crucial to containing the current inflationary pressures.”
While the cash reserve ratio for commercial banks remains at 45 percent, the cash reserve ratio for merchant banks has been adjusted from 10 percent to 14 percent. The liquidity ratio, on the other hand, has been kept at 30 percent.
This decision to raise interest rates is anticipated to have significant implications across various sectors of Nigeria’s economy, as per a local expert who spoke with Xinhua earlier.
Data from the National Bureau of Statistics reveals that Nigeria’s headline inflation rose from 29.90 percent to 31.70 percent in February, primarily due to the continuous surge in food prices.
