The Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture, NACCIMA, Nigeria Employers’ Consultative Association, NECA, and other investment analysts have faulted The Central Bank of Nigeria’s decision to hike interest rates to 26.75%.

The CBN yesterday intensified its efforts to curb rising inflation as it announced further hike in its benchmark interest rate, the Monetary Policy Rate, MPR to 26.75 per cent from 26.25 per cent, an action now faulted by the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture, NACCIMA, Nigeria Employers’ Consultative Association, NECA, and investment analysts who described the additional rate hike as negative for business. Meanwhile, the CBN has dismissed criticism of its interest rate hikes, saying the policy facilitated 234 per cent, year-on-year, YoY increase in capital importation to $5.92 billion in the first half of the year, H1’24 and 62 per cent, YoY increase in Diaspora Remittances to $2.43 billion in H1’24, while external reserves has risen to $37. 05 billion.

CBN Governor, Mr. Olayemi Cardoso announced the further hike in the MPR at a press briefing to announce the outcome of the 296th  Monetary Policy Committee (MPC) meeting in Abuja.

He disclosed that the MPC   also set a new Asymmetric Corridor of   +500/-100 from +100/-300 around the MPR; Cash Reserve Ratio of 45 percent for Deposit Money Banks and 14 percent for Merchant Banks, while Liquidity Ratio was left at 30 percent.

This implies that the CBN will lend to banks at 31.47 per cent while it will pay interest of  25.75%  on deposits from banks.

He said that the high inflation rate was of a great concern to the MPC which noted that insecurity in food producing zones in the country and energy costs were largely responsible for the high inflation in the country.  

Those problems, he said needed urgent attention to effectively tackle the rising inflation.

He said: “The Committee was mindful of the effect of rising prices on households and  businesses and expressed its resolve to take necessary measures to bring  inflation under control. It re-emphasized its commitment to the Bank’s price  stability mandate and remained optimistic that despite the June 2024 uptick in  headline inflation, prices are expected to moderate in the near term.

“This is  hinged on monetary policy gaining further traction, in addition to recent  measures by the fiscal authority to address food inflation.In its consideration, the Committee noted the persistence of food inflation,  which continues to undermine price stability. It was observed that while  monetary policy has been moderating aggregate demand, rising food and  energy costs continue to exert upward pressure on price development.