In its bid to tackle inflation, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) on Tuesday raised interest rate to 24.75 per cent.
The CBN Governor, Olayemi Cardoso, disclosed this on Tuesday at the 294th Meeting of the Monetary Policy Committee press briefing in Abuja
The apex bank hikes the rate from 22.75 percent to 24.75 per cent. The bank had earlier in February raised the interest rate from 18.75 per cent to 22.75 per cent.
At today’s meeting, the CBN raised the Monetary Policy Rate (MPR) by 200 basic points to 24.75 per cent from the 22.75 per cent it was in February, 2024.
The MPC Retains the Cash Reserve Ratio of Deposit Money Banks at 45 per cent and Adjust the CRR of Merchant banks from 10 per cent to 14 per cent.
The liquidity ratio now stands at 30 per cent.
Higher interest rates increase the return on savings. They also make the cost of borrowing more expensive. Higher interest rates help to slow down price rises (inflation).
According to investopedia, higher interest rates tend to attract foreign investment, increasing the demand for and value of the home country’s currency.
