CBN Yields To Pressure, Retains Interest Rate

The Central Bank of Nigeria, CBN , has retained the benchmark interest rate at 27.5 percent. The decision was reached on Tuesday during the Monetary Policy Committee, MPC, meeting in Abuja, the nation’s capital.

The MPC chaired by the CBN Governor has also left other key policy parameters unchanged. This includes the asymmetric corridor around the MPR at +500/-100 basis points.

It retained the liquidity ratio at 30 percent and the Cash Reserve Ratio, CRR, for commercial banks at 50 per cent and 16 per cent for merchant banks.

The interest rate also known as the Monetary Policy Rate, MPR,  is an essential tool used by the CBN to control inflation.

Yemi Cardoso the CBN Governor made the announcement while speaking to the media after the MPC meeting, marking the second time that the apex bank had left the interest rate unchanged.

The magazine reported that the CBN had during the MPC meeting in April left the rate unchanged, the first time since the 2023 after Cardoso was appointed by President Bola Ahmed Tinubu.

The Cardoso-led government bank has changed the rate 10 times in the last two years.

The CBN governor stated that one of the reason for not tampering with the Rate this time around is because inflation has generally normalised and moderated, noting that all the MPC members made the unanimous decision to retain the current level of interest rate. He added that the decision was also driven by  positive macro-economic indices in the economy.

“The MPC noted the relative improvements in some key macroeconomic indicators which are expected to support the overall moderation in prices in the near to medium term,” Cardoso said.

He added, “Members also noted with satisfaction the progressive moderation in food inflation, and therefore commended the government for implementing measures to increase food supply as well as stepping up the fight against insecurity, especially in farming communities.

“The MPC thus encouraged security agencies to sustain the momentum while the government provides necessary inputs to farmers to further boost food production.”

The Chairman, House Committee on National Planning and economic Development,Gboyega Isiaka had on Monday warned the CBN not to tamper with the interest rate, because of the ‘unintended” consequences for the economy.