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Tag: Interest Rate

  • CBN pauses baseline interest rate

    CBN pauses baseline interest rate

    For the first time since February 2024, the Central Bank of Nigeria (CBN) has maintained the Monetary Policy Rate (MPR) at 27.5 per cent.

    TheNewsGuru.com (TNG) reports MPR is the baseline interest rate set by the CBN, serving as the benchmark for all other interest rates within the economy.

    CBN Governor Yemi Cardoso announced the decision on Tuesday in Abuja following the 300th Monetary Policy Committee (MPC) meeting.

    Cardoso said all 12 MPC members voted unanimously to hold all key monetary parameters.

    The committee retained the Cash Reserve Ratio at 50 per cent for Deposit Money Banks and 16 per cent for Merchant Banks.

    The Liquidity Ratio remains at 30 per cent, and the Asymmetric Corridor was held at +500/-100 basis points around the MPR.

    Since February 2024, the MPC under Cardoso had raised the MPR from 18.5 per cent to 27.5 per cent before opting to pause rate hikes with this latest decision.

  • Investors react to interest rate tightening as NGX loses N209bn

    Investors react to interest rate tightening as NGX loses N209bn

    The Nigerian stock market recorded a loss of N209 billion in market capitalisation on Wednesday, as investors reacted negatively to the Central Bank of Nigeria’s (CBN) recent interest rate hike.

    The Monetary Policy Committee (MPC) of the CBN raised the Monetary Policy Rate (MPR) by 25 basis points to 27.50 per cent in November, up from 27.25 per cent in September.

    The Governor of the Central Bank od Nigeria (CBN), Mr Olayemi Cardoso, announced this decision following the 298th MPC meeting in Abuja. He said that the hike aimed to tackle rising inflation, which stood at 33.87 per cent in October.

    Following the announcement, the Nigerian Exchange Ltd. (NGX) market capitalisation dropped from N59.178 trillion to N58.969 trillion, a 0.35 per cent decline.

    Similarly, the All-Share Index fell by 330 points to close at 97,296.57, down from 97,626.27 on Tuesday, reducing the Year-to-Date return to 30.12 per cent.

    Losses in stocks such as Aradel, Fidelity Bank and Nigerian Breweries contributed to the downturn. The market breadth closed negative; 26 stocks declined, while 23 gained.

    JohnHolt led the losers’ chart with a 10 per cent decline to N9.90 per share, while Sunu Assurances topped the gainers’ list with a 9.97 per cent rise to N4.19 per share.

    Market activity increased, with 822.46 million shares valued at N10.29 billion traded in 9,385 deal, representing 28.07 per cent rise in transaction value compared to the previous session.

    Japaul Gold led in trading volume with 115.93 million shares, while Guaranty Trust Holding Company (GTCO) dominated value transactions with N1.52 billion.

    Analysts at Cowry Asset Management Ltd. had predicted mixed market directions ahead of the MPC’s decision, noting its potential impact on interest rate expectations and investment strategies.

    They also highlighted opportunities for strategic positioning in fundamentally strong stocks as November trading wraps up and fund managers prepare for December’s window-dressing activities.

  • CPPE raises concern over CBN’s interest rate hike

    CPPE raises concern over CBN’s interest rate hike

    The Centre for the Promotion of Private Enterprise (CPPE) has raised concerns over the Central Bank of Nigeria’s (CBN) sustained tightening of the Monetary Policy Rate (MPR), now at 27.50 per cent.

    Dr Muda Yusuf, Chief Executive Officer, CPPE, stated in Lagos on Tuesday that the continued rate hikes by the Monetary Policy Committee (MPC) could further stifle economic growth.

    The MPC of the CBN, during its 298th meeting, further raised the country’s interest rate to 27.50 per cent from 27.25 per cent.

    It, however, retained the Cash Reserved Ratio (CRR) at 50 per cent for Deposit Money Banks and 16 per cent for merchant banks.

    The committee also retained the Liquidity Ratio at 30 per cent, and also the Assymetric Corridor at +500/-100 basis points around the MPR.

    “It is troubling that despite the declining growth performance of many critical sectors of the economy as evidenced in the third quarter GDP report, the MPC still continued its tightening stance.

    “The GDP sectoral performance report also revealed a glaring disconnect between the financial services sector and the real economy,” he said.

    He said that the financial services sector recorded a growth of 32 per cent while agriculture and manufacturing grew by 1.14 per cent and 0.92 per cent.

    Yusuf said, “This disposition will deepen this distortions. Meanwhile strategic economic sectors such as agriculture, manufacturing and real estate recorded declines in growth in the third quarter.

    “Air transport and textile remained in recession. These sectors need monetary and fiscal support, not a further tightening of monetary conditions.

    The financial expert called on CBN to increase support for development finance institutions to address financing challenges caused by the sustained tight monetary policy regime.

  • CBN continues monetary policy tightening, raises interest rate

    CBN continues monetary policy tightening, raises interest rate

    The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has further raised interest rate by 25 basis points to 27.50 per cent from 27.25 per cent.

    The Governor of the CBN and Chairman of the MPC, Yemi Cardoso, announced the raise on Tuesday in Abuja, while presenting a communiqué after the 298th meeting of the committee.

    Cardoso, however, announced that the committee also decided to hold all other parameters constant.

    The MPC, thus, retained the Cash Reserved Ratio (CRR) at 50 per cent for Deposit Money Banks (DMBs) and 16 per cent for merchant banks, retained the Liquidity Ratio at 30 per cent, and also retained the Assymetric Corridor at +500/-100 basis points around the MPR.

    Cardoso said that the decisions were unanimously adopted by all 12 members of the MPC who were present at the meeting.

    The News Agency of Nigeria (NAN) reports that Tuesday’s decision is the sixth consecutive tightening of the MPR since Cardoso assumed office as CBN governor.

    The first decision under Cardoso was an aggressive hike in the MPR by 400 basis points from 18.75 per cent to 22.75 per cent in February.

    In March, the committee, again, increased the MPR by 200 basis points to 24.75 per cent, followed by subsequent hikes to 26.25 in May, 26.75 per cent in July, and 27.25 basis points in September.

    Cardoso has, thus, raised the MPR by 875 basis points since he assumed office.

    These decisions are aimed at combating inflation, stabilising the economy, and promoting economic growth.

  • CBN likely to raise interest rates again – Uwaleke

    CBN likely to raise interest rates again – Uwaleke

    A Financial Expert, Prof. Uche Uwaleke, says the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) is likely to raise interest rates again.

    Uwaleke, the Director, Institute of Capital Market at the Nasarawa State University, is also the President, Capital Market Academics of Nigeria.

    He said this in an interview on Sunday in Abuja, against the backdrop of the 298th MPC meeting scheduled to hold on Monday and Tuesday.

    According to him, for the first time in many months, both core and food inflation went up last month.

    “Ditto for rural and urban, year-on-year and month-on-month inflation, further widening the negative real interest rate.

    “The Fx market is still experiencing pressure going by the forward rates of the dollar. FAAC just shared more than N1.4 trillion for October, higher than the figures for previous months,” he said.

    He said that there was also the approaching festivities’ period to consider often characterised by higher prices of goods and services.

    “Against this backdrop, I will not be surprised if the MPC further jerks up the MPR by at least 50 basis points,” he said.

    He, however, advised the committee to retain its prevailing monetary policy rates to moderate investment costs.

    “Nevertheless, all considered, including the rising cost of funds for businesses, I would advise a hold position,” Uwaleke said.

    The MPC raised the Monetary Policy Rate (MPR), which is the baseline interest rate, by 50 basis points to 27.25 per cent from 26.75 per cent in its 297th meeting in September

    That decision marked the fifth consecutive hike of the rates since Yemi Cardoso took charge as CBN governor and chairman of the MPC.

    “The first decision under Cardoso was an aggressive hike in the MPR by 400 basis points, from 18.75 per cent to 22.75 per cent in February.

    In March, the committee, again increased the MPR by 200 basis points to 24 75 per cent, followed by subsequent hikes to 26.25 in May, and 26.75 per cent in July.

    Cardoso has thus, increased the MPR by 850 basis points since the commencement of his tenure.

    The aim, according to him, is to aggressively address Nigeria’s high inflation, particularly core and food inflation.

  • JUST IN: CBN further increases interest rate by 50 basis points to 27.25%

    JUST IN: CBN further increases interest rate by 50 basis points to 27.25%

    The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has further increased the Monetary Policy Rate (MPR) by 50 basis points to 27.25 per cent from 26.75 per cent.

    The Governor of the CBN, Yemi Cardoso, made this known on Tuesday in Abuja, while reading the communiqué from the 297th meeting of the MPC.

    Cardoso announced that the committee also decided to raise the Cash Reserved Ratio (CRR) by 50 basis points from 45 per cent to 50 per cent for Deposit Money Banks (DMBs), while it is 14 per cent to 16 per cent for merchant banks.

    The committee, however retained the Liquidity Ratio at 30 per cent, and also retained the Assymetric Corridor at +500/-100 basis points around the MPR.

  • Manufacturers raise alarm over prevailing interest rate, beg FG for reduction

    Manufacturers raise alarm over prevailing interest rate, beg FG for reduction

    The Manufacturers Association of Nigeria (MAN) is uncomfortable with the present interest rate on loans for its members and needs a further reduction to one per cent, an official has said. Chief Bioku Rahman, the outgoing Chairman of MAN in Kwara and Kogi, disclosed this in Ilorin on Tuesday while speaking during the Association’s 10th Annual General Meeting (AGM).

    The meeting’s theme is “Tackling the Challenges of the Manufacturing Sector: A Win-Win For Government and Local Manufacturers”.

    “The present interest rates are killing businesses. We therefore ask the Federal Government to urgently direct the Central Bank of Nigeria (CBN) to drastically reduce interest rates on industrial loans.

    “The CBN should as well direct commercial banks to reduce interest rates on industrial loans. The interest rates charged on industrial loans and other loans released as COVID-19 palliatives should be significantly reduced further to one per cent,” Rahman said.

    He also urged the Bank of Industry (BOI) to approve and urgently roll out further reductions in its lending rates to industries.

    ”We are asking the CBN to wave many conditions for its foreign exchange policies to local manufacturers. Similarly, CBN can widen the window of foreign exchange to local industries, while urging the Federal Government to harmonise taxes and levies at Federal, State and Local Government levels.”

    Rahman noted that a Heavy-Duty Gas-Energy Generation and Distribution Plant was exclusively needed for Kwara industrialists.

    Speaking also, Mrs Damilola Adelodun, the state’s Commissioner for Business, Innovation and Technology, pledged the state government’s continued support for the Association to boost the state’s economy.

    Adelodun, who represented Gov. AbdulRahman AbdulRazaq of Kwara, reiterated government’s resolve to create a conducive environment for the manufacturers in the state.

    “The state has undertaken several key initiatives to support the manufacturing sector and overall economic development. The Urban Renewal Initiative is transforming the architectural landscape of Kwara to enhance its aesthetic appeal and functionality, making it a more attractive place for businesses and residents,” she said.

    In his address, the President, Manufacturers Association of Nigeria (MAN), Chief Francis Meshioye, described the relationship between the state government and MAN as cordial. He appealed to the state government for infrastructure around the industrial estates to be upgraded.

  • Reactions trail 4th consecutive hike in interest rate by CBN

    Reactions trail 4th consecutive hike in interest rate by CBN

    The stock market’s performance index closed 0.08 per cent weaker on Tuesday as investors reacted negatively to the Central Bank of Nigeria’s (CBN) hike in the Monetary Policy Rate (MPR).

    CBN’s Monetary Policy Committee (MPC) earlier announced another increase in the country’s MPR by 50 basis points to 26.75 per cent, from 26.25 per cent.

    Dr Yemi Cardoso, the CBN Governor, made this known while presenting the communiqué from the 296th meeting of the MPC.

    Cardoso said the decision was in response to continued inflationary pressures.

    He noted that it was important to deal with inflation, as the apex bank was concerned about the impact of inflation on ordinary Nigerians and businesses.

    In a prediction, analysts at Cowry Asset Management Ltd. had stated that the outcome of the MPC meeting, along with other economic news, could stir mixed sentiments in the capital market.

    The analysts said market players would be closely analysing these developments to understand their potential impact on investments.

    Specifically on trading, the Nigerian Exchange Ltd. (NGX) market capitalisation, which opened at N56.945 trillion, shed N47 billion or 0.08 per cent to close at N56.898 trillion.

    The All-Share Index also dropped 0.08 per cent or 83 points to settle at 100,486.12, against 100,568.60 recorded on Monday.

    As a result, the Year-To-Date (YTD) return declined to 34.39 per cent.

    Sell-offs in Tier-one banking stocks, namely: Zenith Bank, Access Corporation, FBN Holdings, United Bank for Africa (UBA), and United Capital, among other declined equities, dragged the market down.

    Also, market breadth closed negative with 27 losers and 14 gainers on the floor of the Exchange.

    On the losers’ table, UPL led by 9.92 per cent to close at N2.27, and John Holt trailed by 9.87 per cent to close at N2.83 per share.

    Omatek lost 9.46 per cent to close at 67k per share, Deap Capital Management and Trust declined by 8.93 per cent to close at 51k and Secure Electronic Technology Plc shed 7.02 per cent to close at 53k per share.

    Conversely, Ikeja Hotel led the gainers table by 6.60 per cent to close at N7.10, Linkage Assurance followed by 6.90 per cent to close at 93k per share.

    Caverton advanced by five per cent to close at N1.47, Sovereign Trust Insurance gained 4.17 per cent  to  close at 50k and Consolidated Hallmark Plc added 2.96 per cent to close at N1.39 per share.

    Analysis of the market activities indicated that trade turnover settled lower relative to the previous session, with the value of transactions down by 2.46 per cent.

    A total of 280.92 million shares valued at N3.63 billion were exchanged in 8,403 deals,compared to 335.70 million shares valued at N3.72 billion exchanged in 8,760 deals posted previously.

    Meanwhile, Veritas Kapital led the activity table in volume with 22.51 million shares worth N23.03 million, followed  by UCAP with 20.85 million shares worth N817.10 million to lead the table in value.

    Jaiz Bank traded 20. 78 million shares valued at N45.11 million, Access Corporation transacted 20.40 million shares worth N394.32 million and Prestige Assurance sold 16.81 million shares worth N8.6 million.

    Interest rate hike: CPPE commends CBN

    Meanwhile, the Centre for the Promotion of Private Enterprise (CPPE) has commended CBN for a moderate interest rate hike.

    It also called for urgent implementation of fiscal policies to stabilise the economy.

    Dr Muda Yusuf, Chief Executive Officer of CPPE, made the call in a statement on Tuesday while responding to the outcome of the Monetary Policy Committee (MPC) meeting of the CBN.

    The meeting started Monday, July 22, and ended Tuesday, July 23, in Abuja.

    The apex bank had increased the Monetary Policy Rate (MPR) to 26.75 per cent from 26.25 per cent to address the surging inflation in the country.

    Nigeria’s inflation rate recently climbed to 34.19 per cent, driven by rising food prices.

    The committee raised the rate by 50 basis points and adjusted the asymmetric corridor to +500 and -100 basis points around the MPR.

    Yusuf said the moderate increase was tolerable and showed that the CBN was listening and responding to the suggestions of financial stakeholders to stop aggressive tightening measures.

    He explained that, although he preferred a pause on rate increases because of the challenges businesses were facing.

    “The marginal increase marks a softening of the tightening stance. It is tolerable,” Yusuf said.

    The CPPE boss, however, called for speedy implementation of fiscal policy measures to tackle inflation.

    “Already, the economic stabilisation plan contains some laudable fiscal policy measures that could reduce production costs in the economy.

    “It is also important and urgent for the government to adopt and quickly implement the recommendation of the Presidential Committee on Fiscal and Tax Reforms on the Customs duty exchange rate, which proposed N800 per dollar.

    “The adoption of this recommendation would have a considerable impact on the cost of goods and services in the country,” he said.

    CBN’s interest rate hike expected – Economist

    Prof. Uche Uwaleke, President of the Capital Market Academics of Nigeria says the Central Bank of Nigeria’s (CBN) decision to hike interest rates was anticipated.

    Uwaleke, in an interview on Tuesday in Abuja, reacted to the Monetary Policy Committee (MPC) decision to increase the Monetary Policy Rate (MPR) by 50 basis points from 26.25 per cent to 26.75 per cent.

    This decision was announced by CBN Governor, Dr Yemi Cardoso.

    The committee also adjusted the asymmetric corridor around the MPR to +500/-100 from +100/-300 basis points, retained the Cash Reserve Ratio (CRR) for Deposit Money Banks at 45 per cent and Merchant Banks at 14 per cent, and maintained the Liquidity Ratio at 30 per cent.

    This marks the fourth consecutive hike in the MPR in the year, raising the rate from 18.25 per cent to 26.75 per cent.

    Uwaleke said, “Having done 750 basis points between February and May, I had predicted they would do a minimum of 50 basis points or a maximum of 100 basis points in July.

    “It is good that they chose the floor, which is a sign that a complete halt is most likely in their next scheduled meeting in September.”

    Uwaleke, also Director of the Institute of Capital Market at Nasarawa State University, Keffi, however, expressed concern over the adjustment of the asymmetric corridor.

    “The adjustment to the asymmetric corridor around the MPR is a major source of concern.

    “The MPC communique did not provide any explanation for increasing the Standing Lending Rate (SLR) from +100 to +500 and the Standing Deposit Rate (SDR) from -300 to -100.

    “By implication, with an MPR of 26.75 per cent, banks will now get loans from the CBN at 31.75 per cent while they will be remunerated for their excess deposits at 25.75 per cent.

    “This will further squeeze liquidity from the banking system and increase the cost of credit, with adverse consequences on output and the equities market,” he noted.

    Uwaleke also said that that the MPC communique should have explained why it preferred tightening the asymmetric corridor rather than adjusting the MPR.

    He pointed out that recent MPC communiques have been silent on how members voted, a detail that is useful even before their personal statements are published.

    “As far as taming the current elevated inflation in Nigeria is concerned, given its major non-monetary drivers, the fiscal side holds the ace,” Uwaleke said.

  • Real reason CBN raised interest rate again

    Real reason CBN raised interest rate again

    The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) on Tuesday raised the country’s baseline interest rate by another 50 basis points to 26.75 per cent.

    Mr Yemi Cardoso, Governor, CBN, who doubles as the Chairman of the MPC, made this known while presenting the communique from the 296th meeting of the committee.

    Cardoso also announced that the MPC adjusted the asymmetric corridor around the MPR to +500/-100 from +100/-300 basis points; retained the Cash Reserve Ratio (CRR) of commercial banks at 45 per cent.

    The committee also retained the CRR  and Liquidity Ratio of merchant banks at 14 per cent and 30 per cent, respectively.

    Cardoso said that the meeting, which had 11 members of the MPC present, reviewed recent economic and financial developments, and assessed risks to the outlook.

    According to him, the committee was mindful of the effect of rising prices on households and businesses, and also expressed its resolve to take necessary measures to bring inflation under control.

    “It re-emphasised its commitment to the CBN’s price stability mandate and remained optimistic that despite the June 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,” he said.

    The CBN Governor said that the prevailing insecurity in food producing areas and high cost of transportation of farm produce were also contributing to this trend.

    According to him, members were, therefore, not oblivious to the urgent benefit of addressing these challenges as it will offer a sustainable solution to the persistent pressure on food prices.

    Cardoso said that the MPC also had in consideration the increasing activities of middlemen who often finance smallholder farmers, aggregate, hoard, and move farm produce across the border to neighbouring countries.

    He said that the committee suggested the need to put in check such activities to address the food supply deficit in the Nigerian market to moderate food prices.

    “The MPC, therefore, resolved to sustain collaboration with the fiscal authority to ensure that inflationary pressure is subdued.

    “In addition, the committee expressed optimism with the recent stop gap measures by the Federal Government to bridge the food supply deficit.

    “In particular, the 150-day duty free import window for food commodities will moderate domestic food prices.

    “It is noteworthy that these measures will not lead to direct injection of liquidity into the economy as to cause further inflation,” he said.

    He said that the measure was a welcome development and might prove effective in the short run.

    He, however, advised that it was expedient that it should be implemented with a defined exit strategy to avert a possible rollback of the recent gains in domestic food production.

    “To support these initiatives, the CBN is already engaging development finance institutions like the Bank of Industry (BOI) to ensure adequate support to industries with a focus on Small and Medium Scale Enterprises (SMEs),” he said.

    Cardoso said that the committee also took cognisance of developments in the foreign exchange market.

    “The MPC noted the narrowing spread between the various foreign exchange segments of the market, an indication of price discovery and improved market efficiency, thus reducing opportunities for arbitrage and speculation.

    “The committee noted that the increase in the level of external reserves would further build confidence for a more stable exchange rate.

    “It, thus, urge the apex bank to explore available avenues to improve inflows, especially through

    diaspora remittances,” he added.

    He said that members of the committee also noted the effort of the Federal Government and private sector towards improving domestic refining capacity.

    “This is expected to reduce foreign exchange,  currently being expended on the importation of refined petroleum products,” he said.

  • BREAKING: Again, CBN hikes interest rate

    BREAKING: Again, CBN hikes interest rate

    The Monetary Policy Committee (MPC), on Tuesday announced another increase in the country’s Monetary Policy Rate (MPR), known as the baseline interest rate, to 26.75 per cent from 26.25 per cent.

    The MPC also adjusted the Asymmetric Corridor to +500/-100 basis points from +100/-300 basis points around the MPR.

    Mr Yemi Cardoso, the Governor of CBN made this known on Tuesday in Abuja, while presenting the communiqué from the 296th meeting of the MPC.

    Details later…