Towering inflation figures which reached 22.90 percent in January had made it a given that something imminent and different was needed to stem the rise, which has now happened following the Central Bank of Nigeria’s (CBN) declaration of a new monetary policy rate (MPR) today.

As of Tuesday, 27 February, the CBN’s monetary policy rate was recorded as standing at 22.75 percent. It was previously pegged at 18.75 percent and had taken four months into the tenure of new apex bank governor Olayemi Cardoso before a fresh value was fixed.

Before this, the bank had carried out two postponements of the monetary policy committee meetings, the last shift being one that occurred on Monday, 20 November 2023.

The central bank at the time was busy implementing strategies to get over the shock of petrol subsidies that were removed six months prior and the efforts still go on.

With this latest MPC rate increment sees a rise of 400 basis points, which simply means a four percent uptick since the last count. Although the rise has been overdue and is considered utterly necessary, it would still mean an extra burden for households and businesses in the event they attempt to borrow to survive or start a venture.

CBN Monetary Policy Committee (MPC) raises MPR by 400 bps from 18.75% to 22.75%, reads a tweet by the bank on Tuesday.

Anytime inflation darts around a circle uncontrollably, banking authorities usually try out raising interest rates to keep excessive spending in check.

CBN Monetary Policy Committee (MPC) raises MPR by 400 bps from 18.75% to 22.75% pic.twitter.com/EEepBQkQQH

— Central Bank of Nigeria (@cenbank) February 27, 2024

In addition to increasing interest, the Central Bank of Nigeria also revised the minimum total deposits of the consumer that can be held by commercial entities to 45 percent. The cash reserve ratio of a bank ensures that it has enough money to dispense to all its clients whenever they need such.

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This new tweak that the CBN has introduced is meant to work hand-in-hand with other measures. The past weeks have seen several announcements ranging from efforts to control the rapidly falling Naira, which has already experienced an unprecedented dip when measured against major currencies.

We are convinced, says Mr Cardoso that the ongoing reforms in the foreign exchange market would yield the desired outcome in the short to medium term.

We will ensure appropriate collaboration with the fiscal sector of the economy to facilitate the effective functioning of other elements and sectors within the economy.

Also, the national bank has attempted to block speculations by the Bureau de Change operators who solely get to benefit from the dirty tactics of making the dollar cunningly higher than it ought to.

The goal for the bank is to reach a climax where buyer’s consumer goods power is restored and then Nigeria can focus on meeting rafts of medium-term or long-term fiscal milestones it has set for the year running.

What comes next now is both 25 and 26 March, 2024, when the monetary policy committee will meet again to work out other modalities. Hopefully, by this time, there will be so much progress report to deliver to Nigerians seeking positive news about their economy.

Ayodele Johnson

Ayodelé is a Lagos-based journalist and the Content and Editorial Coordinator at Meiza. All around the megacity, I am steering diverse lifestyle magazine audiences with ingenious hacks and insights that spur fast, informed decisions in their busy lives.