May 21 (Lagos) - The meeting of the monetary Policy Committee of the Central Bank of Nigeria concluded today with the decision to increase the key benchmark lending rate to 26.25% , an increase of 150 basis points.
During the Q&A session, the CBN governor reiterated that foreign investors are increasingly gaining confidence in the Nigerian market. He also added that the interest rate hike has impacted the inflation figures, but a bigger impact would take time to materialize.
MPR increased by 150bps from 24.75% to 26.25%.
Retain Asymmetric corridor to +100/-300 basis points around the MPR.
Retain CRR of Deposit Money Banks at 45%.
Retain Liquidity ratio at 30.00%.
The next MPC meeting is scheduled for July 22nd and 23rd, 2024.
Whether this rate hike will help bring inflation down meaningfully remains to be seen because there are other factors at play there such as constant Naira devaluations which push up costs of most items.
The CBN delayed these interest rate hikes for almost 8-9 years and that is what resulted in inflation becoming the monster it is today. Interest rates should have been raised since 2015 when the CBN was artificially keeping the rate low, and if that had happened, today's interest rates wouldn't need to be as high as 26.25% as we are now approaching levels that could stifle growth.