In a surprising move, the Central Bank of Nigeria (CBN) raised the Monetary Policy Rate (MPR) by 50 basis points to 27.25% on September 27, 2024. This decision diverges sharply from global trends, where central banks such as the US Federal Reserve and the South African Reserve Bank have recently cut rates in response to slowing inflation [fbfff3b3].
Analysts had anticipated that the CBN would follow suit, given the moderation in inflation, which eased to 32.15% in August 2024 from 33.40% in July 2024 [b2a5261d]. However, CBN Governor Olayemi Cardoso emphasized that the bank's primary focus remains on achieving price stability, indicating a cautious approach to monetary policy [fbfff3b3].
The decision comes at a time when other central banks are adopting a more lenient stance. For instance, the Swiss National Bank reduced its rate to 1.0% in March 2024, while the US Federal Reserve cut its rates to a range of 4.75%-5% for the first time in four years. Similarly, the South African Reserve Bank lowered its rate to 8% amid declining inflation [fbfff3b3].
The CBN's latest rate hike raises questions about its alignment with global economic trends and the potential impact on Nigeria's economy. Financial experts like Professor Uche Uwaleke had previously suggested that the CBN should pause interest rate hikes, arguing that alternative measures could better address the economic challenges faced by Nigerians [b2a5261d].
As the MPC meeting unfolds, the implications of the CBN's decisions will be closely monitored by investors and policymakers, particularly in light of the contrasting approaches being taken by central banks worldwide [fbfff3b3].