The Central Bank of Nigeria (CBN) has announced another increase in the benchmark interest rate, raising it by 150 basis points to 26.25% in a bid to tackle rising inflation and stabilize the naira. This marks the third consecutive rate hike in 2024, reflecting the CBN’s ongoing efforts to manage the country’s economic challenges.
During the 295th Monetary Policy Committee (MPC) meeting held in Abuja, CBN Governor Yemi Cardoso explained that the decision was driven by the need to moderate inflation, which hit 33.69% in April 2024. The CBN also maintained the Cash Reserve Ratio (CRR) for Deposit Money Banks at 45% and set the asymmetric corridor around the Monetary Policy Rate (MPR) at +100 and -300 basis points, with a liquidity ratio of 30 percent.
The increase in the MPR aims to curb the inflationary pressures driven by rising food prices, transportation costs, and exchange rate volatility. While the monthly rate of food and core inflation has shown signs of moderation, the overall inflation remains a significant concern for the Nigerian economy.
The CBN’s decision comes amidst mounting pressures on the naira, which has experienced renewed volatility. Despite previous gains in April, the currency has struggled in recent months, prompting the need for further monetary tightening. This move, however, is expected to pose challenges for the private sector, as higher interest rates increase the cost of borrowing and accessing capital.
Dangote in the News
In related economic news, Aliko Dangote, Africa’s richest man, has been in the spotlight due to various developments within his business empire. Dangote’s recent activities include significant strides in the cement industry and ongoing projects aimed at expanding his conglomerate’s influence across different sectors. The Dangote Refinery, a major project expected to transform Nigeria’s oil industry, has faced various challenges but remains a critical part of the country’s economic landscape. As the CBN continues to implement measures to stabilize the economy, businesses like Dangote play a pivotal role in navigating and shaping Nigeria’s economic future.
