…CBN Raises Interest Rate For Sixth Time In 2024, Now 27.50%
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has raised the country’s interest rate for the sixth time in 2024.
The new interest rate figure, according to analysts, will affect Nigerians’ savings accounts and the cost of loans.
The Olayemi Cardoso-led Monetary Policy Committee (MPC) announced the MPR raise after a two-day meeting held Monday and Tuesday in Abuja.
The CBN had in September raised the Monetary Policy Rate (MPR) by 50 basis points to 27.25 percent despite concerns around petrol price increase, which has been triggering renewed surge in prices of goods and services after two consecutive declines in commodity prices.
The monetary policy rate was increased by 25 basis points to 27.50 percent in November from 27.25 percent in September 2024.
The governor of CBN, Olayemi Cardoso, disclosed this during a press conference on Tuesday after the 298th MPC meeting.
“The committee was unanimous in its agreement to raise the monetary policy rate by 25 basis points to 27.50 percent,” he said.
According to him, the decision to raise the country’s monetary policy rate is to tackle inflation, which stood at 33.87 percent in October 2024.
He also announced that the Cash Reserve Ratio (CRR) was retained at 50 basis points.
In addition, the committee retains the liquidity ratio (LR) at 30 percent and the asymmetric corridor at +500/-100 basis points around the MPR.
Cyril Ampka, an Abuja-based economist, said the new interest rate cap will further worsen the plight of average Nigerians especially those who operate small and medium scale enterprises (SMEs).
“The year 2024 has been a very difficult year for households and small business operators and this is the final straw. It will be difficult for any business to thrive in an atmosphere that is unstable. In the last nine months, the MPR has been adjusted six times and there seems to be no end near for this”, he said.
To another economist, Stephen Iloba, “This is not a good end of the year present to Nigerians who are already groaning and businesses who have been recording abysmal losses since the turn of the year”.
Prof. Uche Uwaleke of Nasarawa State University said the marginal rate increase is a signal that the CBN will completely pause or apply the brake beginning from the first quarter of next year.
He said, “This has to happen to stem the rising cost of funds and negative impact on credit access so that small businesses in particular can breathe.
“Regrettably, headline inflation has remained elevated and even resumed northwards despite the aggressive tightening measures by the CBN. The only area where one can see the benefits of the interest rate hikes has been in the foreign exchange market where the impact of foreign portfolio inflows has helped to stabilise the exchange rate in the official window.
“The weak performance of the agriculture and manufacturing sectors as indicated in the NBS Q3 GDP report may not be unconnected with rising interest and exchange rates.
“Indeed, the current macroeconomic challenges make it imperative for a proper synergy between monetary and fiscal policies.”
Nigeria’s stock market responded positively to the hike in interest rate as the benchmark performance indicator increased slightly by 0.01 percent at the close of trading.
The market’s mild gain came after the CBN MPC raised its benchmark interest rate by 25 basis points to 27.50 percent as it continued to fight against rising rate of inflation.
Shares of newly listed Haldane McCall (+9.98 percent), Sunu Assurances (+9.80 percent), Japaul Gold (+9.72 percent), Prestige Assurance (+9.64 percent), and Neimeth Pharmaceuticals (+9.55 percent) helped push the market higher. Stocks recorded cumulative gain of N8 billion at the close of trading on Tuesday at the Nigerian Exchange Limited (NGX).
Analysts at Lagos-based Vetiva Research had ahead of Tuesday’s outcome of the MPC meeting retained a cautious outlook on the stock market amid sell-side pressure in the banks, as well as a lack of drivers to push aggressive buy-side action in the market.
The Nigerian Exchange Limited (NGX) All-Share Index (ASI) and equities market capitalisation increased from preceding day’s low of 97,626.27 points and N59.169 trillion to 97,639.88 points and N59.177 trillion. In 9,305 deals, investors exchanged 552,110,061 shares worth N8.031 billion. Haldane McCall, Tantalizer, UBA, Prestige Assurance and FBN Holdings were actively traded.
SOURCE: Independent