CBN Raises Monetary Policy Rate to 27.25%, Tightens Cash Reserve Ratio to Combat Inflation

The Central Bank of Nigeria (CBN) has announced an increase in the Monetary Policy Rate (MPR) by 50 basis points, moving it from 26.75% to 27.25%.

This decision was made during the 297th meeting of the Monetary Policy Committee (MPC), held in Abuja.

Alongside the MPR hike, the committee also decided to maintain the asymmetric corridor at +500 and -100 basis points. Additionally, the cash reserve ratio has been raised from 45% to 50%, signaling a continued tightening of monetary policy.

Speaking to the press after the meeting, CBN Governor Olayemi Cardoso explained that the move was a unanimous decision by the MPC, aimed at addressing inflation and stabilizing the economy amidst current challenges.

He said, “The MPC decided to retain the asymmetric corridor around the MPR at plus 500 to minus 100 basis points. The cash reserve ratio for deposit money banks was raised by 500 basis points to 50%, and for merchant banks, by 200 basis points to 16%. The liquidity ratio remains at 30%.”

Despite two months of declining headline inflation, financial analysts had expected the CBN to either hold or lower interest rates.