Economy
CBN raises base interest rate to 15.5%
Central Bank of Nigeria Monetary Policy Committee has raised the base interest rate, Monetary Policy Rate from 14 per cent to 15.5 per cent to help fight inflation now ravaging economies across the globe. The committee had increased the base rate by a total of 250 basis points at its last two meetings. The MPR is the baseline interest rate in an economy at which every other interest rate used within that economy is built around. CBN Governor, Mr Godwin Emefiele, announced the new rate after the September bi-monthly MPC meeting in Abuja. The is the third consecutive time the MPR has been raised for the country’s financial market in 2022. The MPC also raised Cash Reserve Ratio to 32.5 per cent from 27.5 per cent while holding other parameters constant. The Asymmetric Corridor, thus, remains at +100-700 basis points around the MPR, and the Liquidity Ratio remains at 30 per cent.
Asymmetric interest rate corridor is a new tool developed to increase the flexibility of monetary policy. It provides the ability to make timely responses to external finance or risk sentiment shocks through active management of daily open market operations. “The MPC noted with concern the continued aggressive movement in inflation, even after the rate hike at its meeting in May and July. It expressed its unrelenting resolve to restore price stability while providing the necessary support to strengthen the fragile recovery, Emefiele said. Some experts had earlier projected that the CBN would increase the rates to rein in inflation. Prof. Umhe Uwaleke, an economist, had said the MPC would increase the MPR again, by at least, 50 basis points. Uwaleke, a Professor of Capital Market at Nasarawa State University, said that his projection was informed by rising inflation. Aside inflationary pressure and the need to tame it, the MPC would be considering current global monetary developments such as the hike in policy rates by central banks in developed countries.
“For example, the U.S. Federal Reserve recently increased the benchmark rate by 75 basis points, while the Bank of England increased by 50 basis points,’’ he had said. Uwaleke said that monetary tightening by central banks of U.S. and the UK continued to trigger capital outflows from Nigeria with negative implications on the exchange rate. The MPC would equally consider this as justification to increase the MPR,’’ he said. He, however, urged the MPC to hold the prevailing rates constant as tightening may not tame inflationary trend. Be that as it may, if I were a member of the MPC, I would vote for a hold position. In other words, I would advise that the policy rates be held. This is because the major drivers of inflation in Nigeria today are cost-push related rather than demand-pull. Furthermore, policy tightening may not really tame inflationary pressures that are stemming more from high cost of energy and negative impact of insecurity on food output. Any hike in rate at this time will hurt output growth through higher cost of lending to SMEs,’’ he said.
Dr Tope Fasua, another economist, urged the MPC to retain the subsisting rates as past rates increases had not tamed inflation. “I expect that they may further raise rates. My advice to the MPC would be that they hold rates. We have raised rates by 250 basis points in the last two meetings but inflation has surged further. This means that our own inflation is not tightly linked with interest rates and may recede in its own time. Ours is a bit of a carryover from the COVID-19 era of production shutdown and imported inflation because our economy is dependent on foreign ones battling inflation presently,’’ he explained. According to Fasua, raising rates further will only be a continuation of punishment for local industries which borrow locally and are struggling to achieve previous levels of production post Covid-19. Banks are always quick to raise lending rates anyway. The CBN had to recently force them to increase savings rates. Their margins are always so high, so the committee and the CBN must be careful about raising rates ad infinitum,’’ Fasua said.
The Arab Africa Trade Bridges (AATB) Program and the Federal Republic of Nigeria formalized a partnership with the signing of the AATB Membership Agreement, officially welcoming Nigeria as the Program’s newest member country. The signing ceremony took place in Abuja on the sidelines of the 5th AATB Board of Governors Meeting, hosted by the Federal Government of Nigeria.
The Membership Agreement was signed by Eng. Adeeb Y. Al Aama, the CEO of the International Islamic Trade Finance Corporation (ITFC) and AATB Program Secretary General, and H.E. Mr. Wale Edun, Minister of Finance and Coordinating Minister of the Economy, Federal Republic of Nigeria. The Agreement will provide a strategic and operational framework to support Nigeria’s efforts in trade competitiveness, promote export diversification, strengthen priority value chains, and advance capacity-building efforts in line with national development priorities. Areas of collaboration will include trade promotion, agribusiness modernization, SME development, businessmen missions, trade facilitation, logistics efficiency, and digital trade readiness.
The Honourable Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, called for deeper trade collaboration between African and Arab nations, stressing the importance of value-added Agribusiness and industrial partnerships for regional growth. Speaking in Abuja at the Agribusiness Matchmaking Forum ahead of the AATB Board of Governors Meeting, the Minister said the shifting global economy makes it essential for African and Arab nations to rely more on regional cooperation, investment and shared markets.
He highlighted projections showing Arab-Africa trade could grow by more than US$37 billion in the next three years and urged partners to prioritize value addition rather than raw commodity exports. He noted that Nigeria’s growing industrial base and upcoming National Single Window reforms will support efficiency, investment and private-sector expansion.
“This is a moment to turn opportunity into action”, he said. “By working together, we can build stronger value chains, create jobs and support prosperity across our regions”, Edun emphasized. “As African and Arab nations embark on this journey of deeper trade collaboration, the potential for growth and development is vast. With a shared vision and commitment to value-added partnerships, we can unlock new opportunities, drive economic growth, and create a brighter future for our people.”
Speaking during the event, Eng. Adeeb Y. Al Aama, Chief Executive Officer of ITFC and Secretary General of the AATB Program, stated: “We are pleased to welcome Nigeria to be part of the AATB Program. Nigeria stands as one of Africa’s most dynamic and resilient economies in Africa, with a rapidly expanding private sector and strong potential across agribusiness, energy, manufacturing, and digital industries. Through this Membership Agreement, we look forward to collaborating closely with Nigerian institutions to strengthen value chains, expand regional market access, enhance trade finance and investment opportunities, and support the country’s development priorities.”
The signing of this Agreement underscores AATB’s continued engagement with African countries and its evolving portfolio of programs supporting trade and investment. In recent years, AATB has worked on initiatives across agribusiness, textiles, logistics, digital trade, export readiness under the AfCFTA framework, and other regional initiatives such as the Common African Agro-Parks (CAAPs) Programme.
With Nigeria’s accession, the AATB Program extends it’s presence in the region and adds a key partner working toward advancing trade-led development and fostering inclusive economic growth.
Federal Executive Council (FEC) has approved the 2026–2028 Medium-Term Expenditure Framework (MTEF), a key fiscal document that outlines Nigeria’s revenue expectations, macroeconomic assumptions, and spending priorities for the next three years. The approval followed Wednesday’s FEC meeting presided over by President Bola Tinubu at the State House, Abuja. The Minister of Budget and Economic Planning, Senator Atiku Bagudu made this known after the meeting.
The Minister said the Federal Government is projecting a total revenue inflow of N34.33 trillion in 2026, including N4.98 trillion expected from government-owned enterprises. Bagudu said that the projected revenue is N6.55 trillion lower than earlier estimates, adding that federal allocations are expected to drop by about N9.4 trillion, representing a 16% decline compared to the 2025 budget.
He said that statutory transfers are expected to amount to about N3 trillion within the same fiscal year. On macroeconomic assumptions, FEC adopted an oil production benchmark of 2.6 million barrels per day (mbpd) for 2026, although a more conservative 1.8 mbpd will be used for budgeting purposes. An oil price benchmark of $64 per barrel and an exchange rate of N1,512 per dollar were also approved.
Bagudu said the exchange rate assumption reflects projections tied to economic and political developments ahead of the 2027 general elections. He said the exchange rate assumption took into account the fiscal outlook ahead of the 2027 general elections.
The minister said that all the parameters were based on macroeconomic analysis by the Budget Office and other relevant agencies. Bagudu said FEC also reviewed comments from cabinet members before approving the Medium-Term Fiscal Expenditure Ceiling (MFTEC), which sets expenditure limits. Earlier, the Senate approved the external borrowing plan of $21.5 billion presented by President Tinubu for consideration The loans, according to the Senate, were part of the MTEF and Fiscal Strategy Paper (FSP) for the 2025 budget.
The spot rate on Nigerian Treasury bills has been increased by 146 basis points by the Central Bank of Nigeria (CBN) following tight subscription levels at the main auction on Wednesday. The spot rate on Treasury bills with one-year maturity has now surpassed Nigeria’s 16.05% inflation by 145 basis points following a recent decision to keep the policy rate at 27%.
The Apex Bank came to the primary market with N700 billion Treasury bills offer size across standard tenors, including 91-day, 182-day and 364 day maturities. Details from the auction results showed that demand settled slightly above the total offers as investors began to seek higher returns on naira assets despite disinflation.
Total subscription came in at about N775 billion versus N700 billion offers floated at the main auction. The results showed rising appetite for duration as investors parked about 90% of their bids on Nigerian Treasury bills with 364 days maturity. The CBN opened N100 billion worth of 91 days bills for subscription, but the offer received underwhelming bids totalling N44.17 billion.
The CBN allotted N42.80 billion for the short-term instrument at the spot rate of 15.30%, the same as the previous auction. Total demand for 182 days Nigerian Treasury bills settled at N33.38 billion as against N150 billion that the authority pushed out for subscription. The CBN raised N30.36 billion from 182 days bills allotted to investors at the spot rate of 15.50%, the same as the previous auction.
Investors staked N697.29 billion on N450 billion in 364-day Treasury bills that was offered for subscription. The CBN raised N636.46 billion from the longest tenor at the spot rate of 17.50%, up from 16.04% at the previous auction.
-
News3 days agoNigeria to officially tag Kidnapping as Act of Terrorism as bill passes 2nd reading in Senate
-
News3 days agoNigeria champions African-Arab trade to boost agribusiness, industrial growth
-
News3 days agoFG’s plan to tax digital currencies may push traders to into underground financing—stakeholders
-
Finance1 week agoAfreximbank successfully closed its second Samurai Bond transactions, raising JPY 81.8bn or $527m
-
Economy3 days agoMAN cries out some operators at FTZs abusing system to detriment of local manufacturers
-
News1 week agoFG launches fresh offensive against Trans-border crimes, irregular migration, ECOWAS biometric identity Card
-
News3 days agoEU to support Nigeria’s war against insecurity
-
Uncategorized3 days agoDeveloping Countries’ Debt Outflows Hit 50-Year High During 2022-2024—WBG