- CBN battles rising prices.
- CBN’s rate hike sparks concerns over economic growth.
The Central Bank of Nigeria (CBN) has tightened its monetary policy by hiking interest rates to 26.75%, up from 26.25%, in a bid to rein in surging inflation and food prices.
The decision was announced by Governor Olayemi Cardoso after a key meeting in Abuja.
According to him, the decision to further increase the interest rate is to tackle the country’s rising core inflation and food inflation which stood at 34.19 per cent and 40.87 per cent, respectively in June.
He said members of the MPC are not oblivious of the need to address the rising prices of food in Nigeria, necessitating the interest rate hike.
The implication of the interest rate hike is that businesses, farmers, manufacturers and investors will have to pay more to get loans from banks.
The 296th MPC meeting is the fourth time the interest rate has been increased since the appointment of Cardoso in September last year.
Recall that in May 2023, when President Bola Tinubu was inaugurated, Nigeria’s interest rate stood at 18.75 per cent while inflation rate stood at 22.41 per cent.
Meanwhile, despite CBN’s continued interest rate hikes, the country’s inflation has not cooled off.
Earlier analysts had called for a pause in the hike of the interest rate.
The Director of the Centre for Promotion of Private Enterprise, Muda Yusuf, backed call for a pause in the hike of the interest rate.
According to him, the monetary instruments have been overstretched, hence not productive.
“I think we have overstretched monetary instruments because of inflation. They should put a pause on interest rate hikes,” he said.