CBN cites reason for increasing interest rates to 27.25%

The Central Bank of Nigeria (CBN) has cited a need to curb as its reason for hiking the Monetary Policy Rate even higher in recent weeks.

The CBN made this known in a statement released on Sunday.

Recall that, on July 24th, the apex bank hiked the interest rate to a further 27.25%.

While speaking at the Harvard Club of Nigeria, the CBN Governor, Mr Olayemi Cardoso noted that the need to check the excess circulation of money and nip inflation necessitated the hike.

He sympathized with borrowers but insisted that the Nigerian economy took priority.

“Our decision to raise the Monetary Policy Rate to 27.25 per cent was a bold move. Higher interest rates, while painful for borrowers, are necessary to curb excess money in circulation and control inflation.

“Leadership is about making hard choices to secure long-term stability over short-term comfort in moments like these,” Cardoso said.

While reflecting on his one year in office, Cardoso, pointed out that public trust in the financial system is an important aspect of ensuring effective policies.

To this effect, Cardoso noted that the Electronic Foreign Exchange Matching System was introduced to boost transparency.

“Trust is the currency of central banking. If the public loses trust in the institution, the efficacy of its policies diminishes. Our decision to implement the Electronic Foreign Exchange Matching System is rooted in this understanding.

“By enhancing transparency and providing more accurate oversight of forex transactions, we send a strong signal that the CBN is serious about fair and efficient markets,” Cardoso went on.

He noted that, though the apex bank is yet to achieve its inflation targets, the currency markets are now being stabilized and the economy has a positive outlook going forward.