The Central Bank of Nigeria, CBN, announced a further increase in interest rates on Tuesday, pushing the benchmark Monetary Policy Rate, MPR, to a record high of 26.25 per cent.
This marks the third consecutive hike this year as Nigeria grapples with soaring inflation.
The decision comes amidst rising concerns about the country’s inflationary pressures. According to the National Bureau of Statistics, Nigeria’s inflation rate climbed to 33.69% in April 2024, a significant increase from the previous month.
The CBN is aiming to curb inflation by making borrowing more expensive, thereby encouraging saving and dampening consumer spending.
Governor of the CBN, Olayemi Cardoso, stated at a press conference that the move was necessary to achieve “price stability.”
He acknowledged the challenges faced by businesses and individuals due to high interest rates but emphasised the urgency of tackling inflation.
“I believe very strongly that the tools that the central bank is using are working,” Cardoso added.
The aggressive interest rate hike is likely to have a mixed impact on the Nigerian economy. On the one hand, it may help to stabilise prices and attract foreign investment. However, businesses may face difficulties accessing loans due to the increased cost of borrowing, potentially hindering economic growth.
Nigerians are likely to feel the effects of the interest rate hike in various ways. Borrowers, including individuals seeking mortgages or car loans, will face higher interest payments. Conversely, savers may see a slight increase in returns on their deposits.
Ezinwanne Onwuka, senior staff reporter and columnist with WAP is a Nigerian-based writer and content developer. She holds a Bachelor of Arts degree in Philosophy from the prestigious University of Nigeria, Nsukka. Her interests include reading, writing, researching and graphic designing.
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