Nigeria CBN Shocks Markets: Raises MPR to Record 24.75%, Businesses and Consumers to Face Higher Loan Costs

After its 294th meeting, the Central Bank of Nigeria (CBN) has made a bold move by increasing the Monetary Policy Rate (MPR) by 200 basis points to an unprecedented 24.75%.

Led by CBN Governor Yemi Cardoso, this decision underscores the bank's unwavering commitment to combating inflationary pressures and stabilizing the exchange rate. Despite the notable hike, it falls short of the significant 400 basis points rise implemented in the previous month.

Alongside this adjustment, the CBN maintained the Cash Reserve Ratio (CRR) at 45% but raised the CRR for merchant banks from 10% to 14%, while keeping the liquidity ratio at 30%.

Governor Cardoso highlighted the impact of these decisions on the economy, noting a commendable appreciation and stabilization in the exchange rate against the US dollar, despite persisting inflationary challenges.

Nigeria's headline inflation surged to 31.7%, primarily fueled by escalating food prices, reaching 35.92% for food inflation. The forthcoming May 2024 meeting of the Monetary Policy Committee (MPC) will be crucial in assessing the efficacy of these measures in navigating Nigeria's economic landscape.