The interest rate was increased by 50 basis points to 26.75 percent on Tuesday from 26.25 percent in May 2024 by the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN).
This was disclosed by CBN governor Olayemi Cardoso during a press conference on Tuesday following the two-day 296th MPC in Abuja.
He claims that the country’s rising core inflation and food inflation, which stood at 34.19 percent and 40.87 percent, respectively, in June, are the reasons behind the decision to raise interest rates even more.
He noted that the MPC members are aware that the country’s food costs are on the rise and that this calls for an increase in interest rates.
According to reports, companies, farmers, manufacturers, and investors may have to pay more to obtain bank loans as a result of the interest rate hike.
Since Cardoso’s appointment in September of last year, the interest rate has hiked four times, the most recent being at the 296th MPC meeting.
Remember that when President Bola Tinubu took office in May 2023, Nigeria had an interest rate of 18.55% and an inflation rate of 22.41%.
In the meantime, the nation’s inflation has not decreased despite the CBN’s ongoing interest rate increases.
Analysts had previously advocated for a halt to the interest rate hike.
Muda Yusuf, the director of the Center for Promotion of Private Enterprise, supported the proposal to hold off on raising interest rates.
He contends that the financial instruments are unproductive because they have been overextended.
“I think we have overstretched monetary instruments because of inflation. They should put a pause on interest rate hikes,” he said.
