The Central Bank of Nigeria (CBN) recently announced a 50 basis points increase in the country’s baseline interest rate, bringing it to 26.75 per cent. This decision was made during the 296th meeting of the Monetary Policy Committee (MPC) chaired by Mr Yemi Cardoso, the Governor of CBN.
In addition to the interest rate hike, the MPC also adjusted the asymmetric corridor around the Minimum Policy Rate (MPR) and retained the Cash Reserve Ratio (CRR) of commercial banks at 45 per cent. The committee emphasized the need to control inflation while reviewing recent economic and financial developments.
The committee acknowledged the challenges posed by rising food and energy costs, food inflation, and insecurity in food-producing areas. To address these issues, the CBN plans to collaborate with the fiscal authority and implement measures like a duty-free import window for food commodities to moderate domestic food prices.
Furthermore, the CBN aims to support SMEs through development finance institutions and improve foreign exchange market efficiency to stabilize the exchange rate. The committee also recognized efforts to enhance domestic refining capacity to reduce the importation of refined petroleum products.