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CBN Raises Monetary Policy Rate to 24.75%

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The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has announced an increase in the Monetary Policy Rate (MPR) from 22.75 percent to 24.75 percent. Olayemi Cardoso, the Governor of the CBN, disclosed this adjustment during a press conference held on Tuesday at the committee’s 294th meeting in Abuja.

The MPR serves as the fundamental interest rate within an economy, with all other interest rates dependent on it. This rate hike marks the second monetary policy decision under Cardoso’s leadership since assuming office on September 26, 2023.

Cardoso explained that the committee opted to raise the MPR by 200 basis points to 24.75 percent while maintaining the asymmetric corridor at +100 basis points and -300 basis points around the MPR. Additionally, the committee retained the Cash Reserve Ratio (CRR) at 45 percent and the liquidity rate at 30 percent.

This recent adjustment underscores the CBN’s assertive approach to monetary policy tightening aimed at addressing inflation concerns. Cardoso highlighted that while managing inflation remains a key objective for the CBN, the bank is cognizant of the broader impacts of interest rate adjustments.

Cardoso further noted that the increase in interest rates has led to increased activity in the foreign exchange market, resulting in a reduction in the exchange rate and associated costs. He emphasized the importance of achieving a sustainable exchange rate level, which would require collaboration between monetary and fiscal policies.

The MPC also reviewed the banking system’s status and affirmed its safety, soundness, and stability. The committee urged the CBN to maintain vigilant oversight and ensure banks’ compliance with existing regulatory guidelines. Additionally, the committee recommended expedited action on bank recapitalization to bolster the system against potential risks in an increasingly globalized environment.

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