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CBN Implements Another Rate Hike as Inflation Hits 33.69%

The Central Bank of Nigeria’s (CBN) monetary policy committee has raised interest rates from 24.75% to 26.25%.

CBN Governor Olayemi Cardoso announced the increase at a news conference during the committee’s 295th meeting in Abuja. This marks the third consecutive rate hike this year and the 11th since May 2022, aimed at curbing inflation.

Despite these measures, inflation has risen from 17.71% in May 2022 to 33.69% in April 2024.

Cardoso explained that the committee also kept the asymmetric corridor at +100 and -300 basis points around the MPR, maintained the cash reserve ratio (CRR) at 45% for deposit money banks and 14% for merchant banks, and left the liquidity ratio (LR) unchanged at 30%.

The governor stated that the rate hike is part of efforts to control inflation, which he believes are starting to work.

He noted that the latest inflation report indicates some moderation in inflationary pressures, particularly in food, core, and headline inflation components.

“In terms of looking at the inflationary figure over the past year, inflation is indeed getting more and more of an issue. And, frankly, the need to moderate that by saying that any kind of inflation in my view is an issue,” he said.

“However, I think there is light at the end of the tunnel, and that is because as much as we see an increase in the inflationary figures when you go down to the specifics in terms of food, core and headline, you’ll see that it is moderating and decelerating in increment, and that’s the good news.

“Because for the first time, since October we’ve seen a relatively significant moderation in the rate of increase on the news components of inflation that I was talking about.

“I believe very strongly that the tools that the central bank is using are working.

“I’ve said several times, and I’ll say it again, there’s no magic wand. These are things that need to take their own time. They pass through and the effect of the measures in advanced countries, in developing countries, they do take time.”

Cardoso further expressed confidence that the central bank’s measures are effective and anticipated more positive outcomes in the coming months.

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