The Central Bank Of Nigeria (CBN) has adopted a more restrictive monetary stance by raising its benchmark interest rate to 26.75%, a slight increase from the previous rate.
News About Nigeria reports that CBN Governor, Olayemi Cardoso, announced this after the apex bank’s 296th Monetary Policy Committee (MPC) meeting in Abuja on Tuesday.
This move, revealed Cardoso aims to combat the country’s escalating inflationary pressures, particularly in food prices.
With core and food inflation rates reaching 34.19% and 40.87% in June, respectively, the bank’s policymakers recognised the urgent need to act, leading to the interest rate adjustment.
The decision underscores the bank’s commitment to addressing the nation’s surging food costs.
The implication of the interest rate hike is that businesses, farmers, manufacturers and investors will have to pay more to get loans from banks.
The 296th MPC meeting is the fourth time the interest rate has been increased since the appointment of Cardoso in September last year.
Recall that in May 2023, when President Bola Tinubu was inaugurated, Nigeria’s interest rate stood at 18.75 per cent while inflation rate stood at 22.41 per cent.
Meanwhile, despite CBN’s continued interest rate hikes, the country’s inflation has not cooled off.
Earlier analysts had called for a pause in the hike of the interest rate.
The Director of the Centre for Promotion of Private Enterprise, Muda Yusuf, backed call for a pause in the hike of the interest rate.
According to him, the monetary instruments have been overstretched, hence not productive.
“I think we have overstretched monetary instruments because of inflation. They should put a pause on interest rate hikes,” he said.
