CBN raises interest rates to 26.75% amid surging inflation and soaring food prices

In response to escalating inflation and skyrocketing food prices, the Central Bank of Nigeria (CBN) has raised the Monetary Policy Rate (MPR) by 50 basis points, increasing it from 26.25% to 26.75%. CBN Governor Olayemi Cardoso announced this decision following the apex bank’s 296th Monetary Policy Committee (MPC) meeting in Abuja on Tuesday.

The MPC also adjusted the asymmetric corridor around the MPR from +100/-300 to +500/-100 basis points while retaining the Cash Reserve Ratio (CRR) for deposit money banks at 45% and for merchant banks at 14%. The Liquidity Ratio remains unchanged at 30%.

Cardoso emphasized that the committee is aware of the impact of rising prices on households and businesses and is committed to taking necessary measures to control inflation. He noted that despite the inflation uptick in June 2024, prices are expected to stabilize in the near term as monetary policies gain traction, supported by additional fiscal measures to address food inflation.

“The MPC is concerned that food inflation and rising energy costs continue to undermine price stability,” Cardoso stated, adding that the next MPC meeting is scheduled for September 23 and 24.

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Nigeria is currently grappling with one of its worst economic crises in recent memory, marked by soaring living and energy costs. This crisis has been exacerbated by the government’s removal of the petrol subsidy and the unification of foreign exchange windows in May 2023. According to the latest data from the National Bureau of State Statistics (NBS), the country’s inflation hit an all-time high of 34.19% in June. Food inflation also surged to 40.87% year-on-year in June 2024, up from 40.66% in May 2024, and significantly higher than the 25.25% recorded in June 2023.

Despite the President Bola Tinubu administration and governors in the 36 states rolling out various palliative measures, Nigerians continue to suffer from the severe impact of inflation, as the prices of food commodities and basic products multiply uncontrollably.