Nigeria's Central Bank Hikes Interest Rate to 27.25% in Fifth Consecutive Increase

The Central Bank of Nigeria (CBN) has raised the country's interest rate for the fifth consecutive time, bringing it to 27.25%.

This latest hike, announced by CBN Governor Olayemi Cardoso after the 297th Monetary Policy Committee (MPC) meeting, increases the rate by 50 basis points.

Governor Cardoso explained the decision during a press briefing in Abuja, stating, "The MPC has decided to raise the Monetary Policy Rate (MPR) to 27.25 percent. Additionally, the Cash Reserve Ratio (CRR) for Deposit Money Banks will increase from 45 percent to 50 percent, and for Merchant Banks from 14 percent to 16 percent."

Despite this move, Nigeria's inflation rate has shown signs of easing, dropping to 32.15% in August, according to the National Bureau of Statistics (NBS).

However, the CBN's decision contrasts sharply with recent actions by the United States Federal Reserve, which cut its interest rate by 0.5 percent just five days ago.

Economist Muda Yusuf, Executive Director of the Centre for the Promotion of Private Enterprise, had previously urged the CBN to pause its rate hikes.

"Continuous increases in interest rates could stifle economic growth and burden businesses," Yusuf warned.

Since February 2024, the CBN has incrementally raised the interest rate from 22.75% to 26.75%, marking a significant shift from the 18.75% rate before Governor Cardoso's appointment in September last year.