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CBN raises interest rates to 24.75 percent in bid to tackle inflation surge

Monetary Policy Committee Takes Aggressive Measures Amid Mounting Economic Pressures

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In a decisive move to address mounting inflationary pressures, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has hiked the benchmark interest rate by 200 basis points to 24.75 percent, up from the previous 22.75 percent. The announcement, made by CBN Governor Yemi Cardoso after the committee’s second meeting under his tenure, signals a proactive response to the country’s soaring inflation rates.

Cardoso, in a communique issued in Abuja, highlighted the committee’s focus on containing inflation expectations and ensuring exchange rate stability. The decision reflects the urgency of addressing Nigeria’s rising inflation, which stood at 31.70 percent in February, largely driven by escalating food prices.

The MPC’s move also includes the retention of the Cash Reserve Ratio (CRR) of deposit money banks at 45 percent, alongside an adjustment of the CRR of merchant banks from 10 percent to 14 percent. The liquidity ratio remains unchanged at 30 percent.

Emphasizing the importance of addressing food insecurity to mitigate inflationary pressures, Cardoso commended the Federal Government’s efforts in distributing palliatives. However, he underscored the need for sustained action to combat food insecurity, a primary driver of inflation in the country.

In addressing recent regulatory actions, particularly regarding Binance executives, Cardoso emphasized the CBN’s collaboration with other government agencies. While clarifying the CBN’s role in cryptocurrency regulation, he affirmed ongoing cooperation with law enforcement agencies and regulatory bodies to ensure financial stability and compliance.

The MPC’s decision comes against the backdrop of a strengthening naira, which traded at N1,300 against the dollar in the black market on Tuesday, March 26. With inflationary pressures looming large, the CBN’s proactive measures aim to stabilize the economy and restore confidence in Nigeria’s financial landscape amidst challenging economic conditions.

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