CBN Maintains Interest Rate at 27.5% in Strategic Move for Economic Stability
The Central Bank of Nigeria (CBN) has signaled a period of cautious observation, deciding to hold its benchmark interest rate, the Monetary Policy Rate (MPR), steady at 27.5%. The decision was a key outcome of the 301st Monetary Policy Committee (MPC) meeting held in Abuja. Announcing the unanimous verdict, CBN Governor Olayemi Cardoso highlighted the committee’s objective to carefully balance the ongoing fight against inflation with the need to support sustainable economic growth, especially as certain economic indicators show signs of improvement. This hold suggests the bank is assessing the impact of previous aggressive rate hikes before making further moves.
Key Monetary Policy Tools Remain Unchanged
In line with its decision on the MPR, the MPC also voted to maintain the status quo on other crucial monetary policy instruments. The Cash Reserve Ratio (CRR), which dictates the portion of customer deposits that commercial banks must hold with the central bank, remains at 50% for Deposit Money Banks and 16% for Merchant Banks. Furthermore, the Liquidity Ratio (LR) was kept at 30%, ensuring banks maintain sufficient liquid assets. The asymmetric corridor around the MPR also remains unchanged at +500 and -100 basis points, providing a framework for interbank lending rates.
This comprehensive decision to keep all primary policy levers steady underscores a strategic pause by the CBN. The committee appears focused on consolidating recent gains and allowing the economy to fully absorb the effects of past monetary tightening. By maintaining these rates, the CBN aims to foster stability in the financial system while continuing its mandate to rein in inflation and support the Nigerian economy’s long-term health.
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