During the 295th MPC meeting and the third MPC meeting of the year which held on the 20th and 21st of May 2024 under the Central Bank Governor Dr. Olayemi Cardoso, the key policy rate was significantly tightened to address liquidity surplus and persistent high inflation. The decisions included:

1.     Increasing the Monetary Policy Rate (MPR) by 150basis points to 26.25%.

2.    Retaining the asymmetric corridor at +100bps/-300bps around the MPR.

3.    Retaining the Cash Reserve Ratio (CRR) at 45% for DMBs and 14% for Merchant Banks.

4.   Retaining the Liquidity Ratio at 30%.

The Governor of the apex bank attributed the third consecutive hike in bank interest rates to continued efforts towards moderating inflation which reached 33.69% in April 2024 according to the National Bureau of Statistics (NBS).

He also stated that the significant decline in other inflation such as food and core inflation suggest the positive effects of the apex bank’s hawkish monetary policy stance since the beginning of the year.

The CBN’s MPC in its February and March meetings had increased MPR by a total of 600bps. Today’s raise takes the total to 750 bps. The bank will hold its next MPC meeting in July 2024 and expectation of this will be driven mainly by the inflationary trend.