CBN raises interest rate to 27.25 percent

The new rate marks a 50-basis-point increase from the 26.75 percent announced by the central bank in July 2024. This adjustment reflects an overall 8.5 percent rise in interest rates since the current leadership took office a year ago. According to Cardoso, "The committee unanimously agreed to further tighten monetary policy, resulting in the following decision: the MPR will be increased to 27.25 percent."

Despite this, the Monetary Policy Committee (MPC) maintained the asymmetric corridor around the MPR at +500 to -100 basis points. Additionally, the Cash Reserve Ratio for deposit money banks was raised by 500 basis points to 50 percent, while for merchant banks, it increased by 200 basis points to 16 percent, up from 14 percent. The liquidity ratio was left unchanged at 30 percent.

Cardoso further explained, “The MPC resolved to keep the asymmetric corridor around the MPR at plus 500 to minus 100 basis points. It also increased the Cash Reserve Ratio for deposit money banks to 50 percent, a 500 basis point rise, and for merchant banks to 16 percent, up 200 basis points from 14 percent, while maintaining the liquidity ratio at 30 percent.”

Financial analysts had expected the Central Bank of Nigeria (CBN) to either maintain or lower interest rates after two consecutive months of declining headline inflation.