Despite the current economic crisis facing the nation, the Central Bank of Nigeria (CBN) has again raised its benchmark interest rate by 50 basis points to 27.25 per cent.
This is the fifth consecutive interest hike carried out since this year.
The apex bank’s decision to raise the interest rate has however, put to question the rising borrowing costs for business owners and consumers.
The increase in rates announced after a two-day Monetary Policy Committee (MPC) meeting in Abuja which included a significant 500 basis point increase in the Cash Reserve Ratio (CRR) to 50 per cent is also aimed at tightening liquidity in the banking system.
According to the CBN Governor, Olayemi Cardoso, who presided over the MPC, the decision to raise the Monetary Policy Rate (MPR) came despite a recent ease in inflation.
He stated that tightening policy remains essential to safeguard Nigeria’s economic stability.
“”The committee was unanimous in its decision to further tighten policy and thus decided to raise the MPR to 27.25 per cent,” Cardoso said.
However, the central bank’s strategy appears to be focused mainly on containing inflationary pressures before they can re- accelerate, as well as stabilizing the naira amid persistent foreign exchange challenges.
