The Central Bank of Nigeria (CBN) has on Tuesday, May 21, 2024 increased the benchmark interest rate by 150 basis points, moving it from 24.75 per cent to 26.25 per cent.

The benchmark interest rate, also known as the MPR (monetary policy rate) was increased by the apex bank in response to rising food inflation.

The MPR is the interest rate the CBN uses to lend to banks who then lend to customers at a higher rate.

The increase was made known after a two-day Monetary Policy Committee (MPC) meeting held on Monday and Tuesday.

The governor of the CBN, Olayemi Cordoso disclosed that the MPC voted to retain the asymmetric corridor around the MPR at +100 to -300 basis points

He stated that the committee voted to keep the Cash Reserve Ratio (CRR) at 45 per cent for commercial banks and adjust the CRR of merchant banks from 10 per cent to 14 per cent.

Mr Cardoso added that the Marginal Propensity to Consume (MPC) noted that the inflationary pressure is largely driven by food inflation.

He said: “The committee last reiterated several challenges confronting the effective moderation of food inflation to include rising costs of transportation of farm produce, infrastructure-related constraints along the line of distribution network, security challenges in some food producing areas and exchange rate pass-through to domestic prices for imported food items.

“The MPC urged that more be done to address the security of farming communities to guarantee improved food production in these areas.”

He announced that the next MPC meeting would be held on 22 and 23 July.

BEB