CBN Increases Interest Rate To 26.75%
The Monetary Policy Committee of the Central Bank of Nigeria has raised the benchmark lending rate to 26.75 percent.
The increase in the Monetary Policy Rate was announced by the Governor of the CBN, Olayemi Cardoso, at the end of the 296th MPC meeting in Abuja on Tuesday.
The MPC has maintained a hawkish stance to tame inflation since it resumed meetings this year and thus far, it has hiked the rate by more than 500 points.
The rate was raised to 26.25 percent in May.
However, with inflation moving to 34.19 percent in June, according to the National Bureau of Statistics, the headline inflation increased by 0.24 percent relative to the May 2024 headline inflation rate which was 33.95 percent.
On a year-on-year basis, the headline inflation rate was 11.40 percent points higher than that of June 2023 (22.79 percent).
Also, on a month-on-month basis, the headline inflation rate in June 2024 was 2.31 percent, which was 0.17 percent higher than the rate recorded in May 2024 (2.14 percent) meaning that the rate of increase in the average price level was higher in June than in May.
Repeatedly, the CBN governor has maintained that the MPC members were committed to price stability and were willing to keep tightening until inflation is tamed.
Multiple reports from investment houses had projected that the MPR would be hiked,
Cowry Asset Management, in its weekly report, projected a 25bps to 50bps hike in interest rates, while the Meristem report anticipates “a 100 basis point increase in the monetary policy rate to 27.25 percent while likely keeping other parameters unchanged. Overall, we anticipate that the committee will prioritize inflation control and capital inflow sustainability, crucial for maintaining a stable exchange rate system, and accordingly, implement a rate hike to achieve these objectives.”
