Nigerians React as CBN Hikes Cost of Borrowing from Banks to 27.25 Per Cent

• The Central Bank of Nigeria has once again increased the country’s lending rates during its Monetary Policy Committee meeting
• The apex bank said its firm monetary policy has resulted in increased stability and alignment in exchange rates across various markets
• It highlighted the importance of controlling excess liquidity in the economy and addressing the pressures on forex demand

Legit.ng journalist Victor Enengedi has over a decade's experience covering Energy, MSMEs, Technology and the Stock Market.

The Central Bank of Nigeria's (CBN) Monetary Policy Committee (MPC) has increased the monetary policy rate (MPR), which sets the benchmark for interest rates, from 26.75% to 27.25%.

CBN governor Olayemi Cardoso disclosed the 50 basis points hike during a press conference on Tuesday, September 24, 2024 following the committee’s 297th meeting in Abuja.

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According to Cardoso, the adjustment aims to curb inflation further.

Another interest rate hike

At the meeting, Cardoso stated that the committee maintained the asymmetric corridor at +500 and -100 basis points around the MPR.

He also said the cash reserve ratio (CRR) was raised from 45% to 50%, while the liquidity ratio remained unchanged at 30%.

Cardoso mentioned that the MPC plans to enhance its monitoring of future releases to manage their impact on price trends.

He also observed increased stability and alignment in exchange rates across various market segments, attributed to the bank’s firm monetary policy.

He said this would boost confidence, allowing economic participants to plan for the medium to long term.

Cardoso said:

“The MPC noted that even though headline inflation trended downwards due to a moderation in food inflation, core inflation has remained elevated, driven primarily by rising energy prices."

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The National Bureau of Statistics (NBS) reported on September 16 that Nigeria's inflation rate dropped for the second consecutive month, reaching 32.2% in August 2024.

The MPC acknowledged the ongoing expansion of the money supply and emphasized the importance of controlling excess liquidity in the economy and addressing the pressures on foreign exchange demand.

Nigerians react to interest rate hike

Following CBN's recent increase in borrowing costs, many Nigerians have taken to social media to react to the new interest rate hike.

See some of the reactions below:

Vincent Codeworks @vincentwap said:

"For those that keep their money in Naira. 500,000 Naira I saved in 2015 valued at 45,000 today."

oluwasoft @softmario1983 said:

"Nawa so cardoso feel say him done work now.... God safe us all"

9CEJOE@9ce_joe said:

"What's the effect of high MPR,with resultant high lending Rate in a grounded and bleeding economy, whose population has no purchasing power already.

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"Such tightening measures are for an with excess liquidity, not for ours,that is kwashiokored."

mrwealthy @FOOT_PRINT_ said:

"This will further damage the naira & inflation will go harder 🤕$1 = #2,500"

T-s-n scott 🇳🇬🇳🇬🇳🇬@Tsn_scott said:

"Thanks cbn for the good interest rate on fixed deposit"

Chekus James @EgoOkolobia1 said:

"We are in for a very long ride. Business, brace up! Investors, stay patient. Tinubu is fulfilling his campaign promises in grand style."

owoblow @aseoluwa21 said:

"It is pure wickedness, just pity us"

Mr. Ade @Dejite03 said:

"The banks are making a huge profit at the expense of their customers."

LEKAN D PLUMBER @Harkplum said:

"As una dey raise everything na so una problem go dey rise."

FG announces rise in CBN’s foreign reserves

Meanwhile, Legit.ng earlier reported that Nigeria's foreign reserves have witnessed a significant increase of $4 billion over the past seven months.

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Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, disclosed while speaking at a meeting organized by the Debt Management Office (DMO) for the issuance of the $500 million local bond set to kick off on Monday, August 19.

Edun attributed this growth to robust fiscal policies and reforms aimed at enhancing revenue collection efficiency across various sectors.

Proofreading by James Ojo Adakole, journalist and copy editor at Legit.ng.

Source: Legit.ng