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Nigeria’s central bank raises interest rate to 22.75 %

Published

9 months ago

February 28, 2024

The Central Bank of Nigeria (CBN), during its Monetary Policy Committee (MPC) meeting on Tuesday, raised its benchmark interest rate, the Monetary Policy Rate (MPR), by 400 basis points from 18.75 percent to 22.75 percent.

The CBN also increased the cash reserve ratio (CRR) of banks to 45% from 32% and modified the Asymmetric Corridor around the MPR to +100/-700 from +100/-300. Nonetheless, the MPC kept the liquidity ratio at thirty percent.

According to Cardoso, the decision to abruptly increase the MPR was made in order to address the system’s high rate of inflation and substantial liquidity, as the inflation rate surged further in January to hit 29.90% annually and its January 2024 Consumer Price Index (CPI) report, which also noted that food inflation rose to 35.41 percent during that time from 33.93 percent in December 2023.

He said, “The committee’s decisions were centred on inflationary and exchange pressures, projected inflation and rising inflation expectations.

“Members were concerned about the persistent rise in the level of inflation and emphasised their commitment to reverse the trend, as the balance of risks leans towards rising inflation.

“The committee, however, acknowledged the trade-off between the pursuit of output growth and taming inflation but was convinced that an enduring output expansion is possible only in an environment of stable economics.

“The balance of the argument was in favour of a considerable rate hike to drive down inflation substantially.”

Financial commentators have predicted that the MPR’s decision will result in increased foreign investment inflows, an appreciation of the naira, and higher interest rates in the fixed income markets.

There is a chance that the rise in MPR may result in higher borrowing costs and less financing to the real sector, which might lead to slower growth in the industrial and agricultural sectors.

Related Topics:Featured Interest rate Nigeria Olayemi Cardoso

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Food prices drive second straight monthly hike in Nigeria’s inflation

Published

2 minutes ago

November 17, 2024

Ifeoluwa Dada

According to official statistics released on Friday, Nigeria’s inflation rate increased for the second consecutive month in October, rising to 33.88% in annual terms from 32.70% in September, mostly as a result of increasing food costs.

In an attempt to boost economic development and strengthen public finances, President Bola Tinubu devalued the naira and reduced subsidies, which caused inflation to spike in the second half of last year.

As the effects of the naira devaluation started to lessen in July of this year, a slew of hikes in the price of petroleum and devastating floods that destroyed crops once again exacerbated pricing pressures, making the greatest cost-of-living crisis in decades worse in Africa’s most populous country.

According to the National Bureau of Statistics, price increases for basics such as rice, maize, bread, potatoes, and cooking oil prompted food inflation to surge from 37.77% in October to 39.16% year over year.

This year, more than 1.5 million hectares of agriculture have been damaged by torrential rain and floods in 29 of Nigeria’s 36 states, leaving millions hungry and displacing large numbers of people.

In an effort to curb inflation, the central bank has raised interest rates five times this year. On November 26, it is expected to make its final rate decision of the year.

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MTN financial report reveals drop in group service revenue

Published

10 minutes ago

November 17, 2024

Ifeoluwa Dada

Due to operational difficulties in Sudan and the depreciation of the Nigerian naira, MTN Group, Africa’s largest telecom provider, announced on Thursday an 18.5% decline in service revenue for the third quarter that concluded on September 30.

With 288 million users in 17 African regions, MTN said that its group service revenue dropped from 156.3 billion rand ($6.99 billion) in the same quarter of the previous year to 127.4 billion rand.

Despite stating that “the naira was less volatile on a sequential basis in Q3 than in preceding quarters,” the business reported a 48.7% decline in MTN Nigeria’s income due to the currency’s depreciation.

Due to a stronger Ugandan shilling than the previous year, Uganda’s largest contributor, MTN South Africa (MTN SA), expanded by a meagre 3.3%.

Due to “subscriber registration regulations in Nigeria and a decline in users in Sudan, where the conflict has displaced millions of people,” the business reported that its subscriber base increased by 1.6% to 288 million.

Given the higher demand in Nigeria despite the legal obstacles, MTN plans to increase its capital expenditures, which it expects would total between 28 and 33 billion rand for the entire year.