CBN Raises MPC Rate to Record High as Naira Stabilisation Drive Intensifies

The Central Bank of Nigeria raised its Monetary Policy Rate by 150 basis points to 28.75 per cent at the conclusion of its two-day Monetary Policy Committee meeting on Thursday, in a move that underlines the apex bank's determination to bring inflation under control.

The decision, announced by CBN Governor Olayemi Cardoso, marks the highest benchmark rate in the history of inflation-targeting monetary policy in Nigeria.

**Why the CBN Is Tightening**

The rate rise follows several consecutive months of elevated consumer price inflation that has eroded the purchasing power of Nigerian households. The CBN has argued that tightening financial conditions is necessary to drain excess liquidity from the banking system, reduce speculative pressure on the naira, and signal to investors that price stability remains a priority.

Governor Cardoso told journalists at the post-MPC press conference that the committee considered a range of scenarios before settling on the 150 basis point increase, describing it as a "decisive action" rather than an incremental adjustment.

**Market Implications**

The decision immediately pushed interbank lending rates higher. Commercial banks are expected to reprice their loan books in the coming weeks, with implications for businesses that depend on short-term credit.

The naira firmed modestly against the dollar in the parallel market following the announcement, though traders cautioned that sustained stability would require consistent implementation of CBN policies rather than any single rate move.

**Criticism and Debate**

Not all economists applaud the CBN's aggressive stance. Several argue that rate hikes cannot on their own contain inflation that has structural roots — including high energy costs, currency pass-through, and food supply chain disruptions.

Businesses reliant on bank financing have expressed concern that higher borrowing costs could squeeze investment and employment at a time when the economy is still recovering from recent shocks.

**What Comes Next**

Governor Cardoso indicated that the MPC will remain data-dependent, but did not rule out further tightening if inflation fails to moderate. The next MPC meeting is scheduled for late next quarter.