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CBN raises interest rate by 400 basis points to 22.75% to tackle inflation

On Tuesday, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) increased the Monetary Policy Rate (MPR) by 400 basis points to 22.75 per cent from 18.75 per cent.

CBN governor Yemi Cardoso, who chairs the MPC, announced the committee’s decisions on Tuesday after the meeting.

Mr Cardoso said the asymmetric corridor around the MPR adjusted to +100 to 700 basis points from +100 to 300 basis points.

“The cash reserve ratio (CRR) was increased from 32.5 per cent to 45 per cent, while the liquidity ratio was retained at 30 per cent. The committee decision is centred around the current inflationary and exchange rate pressures, projected inflation, and rising inflation expectations.

“Members are concerned about the persistent rise in the level of inflation and emphasised the committee’s commitment to reverse the trend as the balance of risk leans towards rising inflation.

”The committee, however, acknowledged the tradeoff between the pursuit of output growth and taming inflation but was convinced that an enduring output expansion is possible only in environment of low and stable inflation,” he said.


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