CBN to Raise Interest Rate as Inflation Hits 29.90%

The Central Bank of Nigeria (CBN) is likely to increase the interest rate today as it holds its first Monetary Policy Committee (MPC) meeting under the new governor, Olayemi Cardoso, in Abuja. The two-day meeting, which ends tomorrow, is the first since Cardoso took over from the former acting governor, Folashodun Shonubi, in September last year.

The MPC last met in July 2023, when it kept the interest rate at 18.75 per cent, despite the rising inflation and exchange rate pressures. However, with the inflation rate reaching a record high of 29.90 per cent in January 2024, the MPC is expected to adopt a tighter monetary policy stance to curb the inflationary spiral and stabilize the Naira.

Bismarck Rewane, the CEO of the Financial Derivatives Company, predicted that the MPC may hike the interest rate by at least 200 basis points, or two percentage points, to signal its commitment to fighting inflation and restoring confidence in the economy.

The MPC meeting comes amid the economic challenges facing Nigeria, which prompted President Bola Ahmed Tinubu to set up an economic advisory committee of business leaders on Sunday. The committee is expected to provide policy recommendations and solutions to the president on how to overcome the economic crisis.