CBN Raises Interest Rates to 26.75% Amid High Inflation

The Central Bank of Nigeria (CBN) has increased the Monetary Policy Rate (MPR) by 50 basis points, from 26.25% to 26.75%, in response to escalating inflation and surging food prices.

Governor Olayemi Cardoso announced the decision following the CBN’s 296th Monetary Policy Committee (MPC) meeting held in Abuja on Tuesday.

The MPC has maintained a hawkish stance throughout the year to combat rising inflation, marking more than a 500-point increase in rates since meetings resumed.

In May, the rate was raised to 26.25% as inflation surged to 34.19% in June, according to the National Bureau of Statistics. This represented a 0.24% increase from May’s 33.95% rate and an 11.40% rise year-on-year compared to June 2023 (22.79%).

Month-on-month, inflation rose by 2.31% in June, up from 2.14% in May, indicating a faster pace of price increases.

Governor Cardoso reiterated the MPC’s commitment to ensuring price stability, emphasizing their readiness to continue tightening policies until inflation is brought under control.

Investment houses had predicted a rate hike, with Cowry Asset Management foreseeing a 25 to 50 basis points increase, and Meristem projecting a 100 basis point hike to 27.25%, while maintaining other parameters unchanged. These measures are aimed at curbing inflation, stabilizing capital inflows, and ensuring a sustainable exchange rate system.