The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) on Tuesday 26th, March has declared a significant increase in the benchmark interest rate to 24.75 per cent.
This was done at the MPC briefing which was presided over by the CBN Governor, Yemi Cardoso in Abuja.
The Monetary Policy Rate (MPR) was raised by 200 basic points from 22.75 per cent set earlier in February to 24.75 per cent.
The CBN Governor Yemi Cardoso, spoke to journalists after the MPC meeting which is the second in his tenure.
Speaking, He emphasized the committee’s commitment to curbing inflation and restoring the purchasing power of Nigerians.
In his own words, he said “The considerations of the committee at this meeting focused on the current inflationary pressures and the need to anchor inflation expectations as well as ensure sustained exchange stability,”
The CBN chief also announced that the Cash Reserve Ratio (CRR) of deposit money banks are to remain at 45 percent. However, the the CRR of merchant banks is adjusted from 10 to 14 percent.
The committee also retained the liquidity ratio at 30 percent.
According to some studies, Higher interest rates increase the return on savings, make the cost of borrowing more expensive and more importantly, Higher interest rates help to slow down price rises.
Hopefully, this will help in pegging the rising inflationary menace that has bedeviled the country in recent times.
