The Central Bank of Nigeria’s Monetary Policy Committee raised the benchmark interest rate to a record 22.75% by 400 basis points.
This was revealed by CBN Governor Olayemi Cardoso on Tuesday in Abuja during the reading of the minutes from the first MPC meeting of the year.
Speaking to reporters during the two-day meeting in Abuja, Cardoso stated that the committee had decided to increase the cash reserve ratio from 32.5 percent to 45 percent and modify the asymmetric corridor surrounding the MPR from plus 100 to -300 basis points to +100 to -700.
He said, “All 12 members of the committee decided to further tighten monetary policy by raising the MPR by 400 basis points to 22.75 per cent from 18.75 per cent. Adjust the asymmetric corridor around the MPR to +100 to -700 from plus 100 to -300 basis points.
“The committee also raised the cash reserve ratio from 32.5 per cent to 45 per cent while retaining the liquidity ratio at 30 per cent.”
The MPC, led by Folashodun Shonubi, the former acting governor of the national bank, raised the monetary policy rate by 25 basis points to 18.75 percent in July 2023 from 18.5 percent in May of the previous year.
The percentage of capital required was kept at 32.5 percent, and the percentage of liquidity was kept at 30%.
Since then, when the most recent MPC was conducted in July 2023, the MPR has increased from 13% in May 2022 to 18.55%.
Prior to the first MPC meeting, analyst forecasts had been mixed, but the new rate exceeded all financial experts’ predictions.
Interest rates must be lowered, according to President Bola Ahmed Tinubu, in order to boost consumer spending and investment and maintain a stronger economy.