CBN Announces New Interests Rate, Bank Customers’ Loans, Bank Account Deposits To Change
- The CBN has announced that it has increased the benchmark interest rate by 150 basis points
- The new rates mean that Nigerians will have to pay more to borrow from their banks and also review existing loans
- The Cardoso-led CBN hopes that its latest decision will help checkmate the persistent rise in inflation rate
Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
The Central Bank of Nigeria's Monetary Policy Committee (MPC) has increased the monetary policy rate (MPR), the benchmark for interest rates, to 26.25%.
The new rate is a 150 basis points increase compared to the previous rate of 24.75%.
Source: Getty Images
The new rate was disclosed by Olayemi Cardoso, the Governor of the CBN who also serves as the Chairman of the MPC, at the end of the 295th MPC meeting held in Abuja on Tuesday, May 21, 2024.
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Why CBN increase interest rate
Punch reports that the CBN's MPC has been very determined to fight rising inflation and has maintained a hawkish stance since it resumed meetings this year.
The CBN hopes the latest increase will affect the Nigerian economy, especially food prices.
In April 2024, Nigeria's inflation rate was 33.69%, the highest level in over 30 years.
Impact of the new interests rate
One negative impact of the new rate is that the cost of borrowing will increase.
Financial institutions use the CBN benchmark interest rate to determine what customers will pay when applying for a loan.
Also, Nigerians with outstanding loans will receive a rate review to match the CBN's latest interest rate decision.
On the other hand, the new interest rate means Nigerians will earn more from their bank savings.
Here is a snapshot of decisions by CBN at the MPC meeting
Also, at the meeting, the CBN announced it retained the Cash Reserve Ratio (CRR) of Deposit Money Banks (DMBs) at 45% and put the Asymmetric corridor around the MPR at +100 and –300 basis points.
CBN stops daily CRR debits of Access, others
Earlier, Legit.ng reported that the Central Bank of Nigeria announced that it would stop daily Cash Reserve Requirement (CRR) debits for banks.
The apex bank said it would adopt an updated CRR mechanism intended to facilitate banks' capacity for planning, monitoring and aligning with records with the CBN.
This was disclosed in a letter addressed to all banks and signed by Adetona Adedeji, the acting director of the banking supervision department, on Friday, February 2, 2024.
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Source: Legit.ng
