ABUJA – The Central Bank of Nigeria (CBN) has raised the Monetary Policy Rate (MPR) by 150 basis points to 27.5 percent, the sixth consecutive hike this year, as the naira plunged to a record low of ₦1,650 per dollar on the parallel market on Thursday.
Announcing the decision after the Monetary Policy Committee (MPC) meeting in Abuja, CBN Governor Dr. Olayemi Cardoso cited persistent inflationary pressures, a widening trade deficit, and speculative attacks on the local currency as reasons for the aggressive tightening.
“The committee noted with grave concern the renewed volatility in the foreign exchange market. While we have cleared a significant portion of the backlog, demand continues to outstrip supply. We must act decisively to restore confidence,” Cardoso told financial correspondents.
He added that the committee was split, with three members voting for a smaller hike, two for a status quo, and six backing the full 150-basis-point increase.
Market Reaction: Chaos and Concern
The news sent shockwaves through the Nigerian Exchange (NGX) as investors fled to the sidelines. The All-Share Index fell by 1.8 percent shortly after the announcement, with banking stocks—particularly GTCO, UBA, and Access Corporation—leading the losses.
At the parallel market, also known as the black market, currency traders in Lagos’s Festac Town and Abuja’s Zone 4 reported that the naira weakened further after the announcement, touching ₦1,670 before settling at ₦1,655.
Bureau de Change (BDC) operator Alhaji Sani Musa, who trades in the Wuse Zone 4 market, told our correspondent: “The CBN is fighting with one hand. They raised rates, but where is the dollar? We don’t have dollars to sell. Until the oil refineries work and we stop importing everything, this will continue.”
Borrowing Costs Skyrocket, Businesses Groan
The rate hike, the highest since the early 2000s, has drawn sharp criticism from the Organised Private Sector (OPS). The Lagos Chamber of Commerce and Industry (LCCI) warned that the move would cripple small businesses and accelerate job losses.
“The average manufacturer cannot borrow at 27.5 percent. That is not a business environment; it is a survival gauntlet,” said LCCI Director-General Dr. Chinyere Almona. “We urge the CBN to consider fiscal solutions—production, not just monetary tightening.”
Similarly, the Nigerian Association of Small and Medium Enterprises (NASME) called for an emergency stimulus package, warning that “hundreds of thousands of SMEs will close shops before Christmas” if lending rates remain at current levels.
IMF Weighs In, Bank Customers Panic
In a surprising development, the International Monetary Fund (IMF) Resident Representative for Nigeria, Dr. Ari Aisen, released a brief statement supporting the CBN’s “courageous” decision while urging complementary fiscal reforms.
“The MPR hike is necessary but insufficient. Nigeria must aggressively boost oil output and reduce import dependency,” the statement read.
Meanwhile, worried bank customers have begun requesting loan restructuring across commercial banks. A senior loan officer at a Tier-1 bank, who spoke anonymously, confirmed that “default inquiries have doubled in the last 48 hours.”
What This Means for the Average Nigerian
For ordinary citizens, the rate hike translates to:
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Higher borrowing costs: Personal and car loans will become significantly more expensive.
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Increased savings rates: Fixed deposit yields may rise above 20 percent for the first time.
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Potential job losses: Businesses may downsize to afford operating loans.
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Rent and food inflation: Landlords and traders may pass increased borrowing costs to consumers.
Analyst Outlook
Financial analyst and CEO of Vetiva Capital, Mr. Adewale Adebayo, offered a grim near-term forecast: “We expect the naira to test ₦1,700 by month-end unless the NNPC begins remitting dollars to the CBN. The MPR hike is a painkiller, not a cure.”
The next MPC meeting is scheduled for mid-January 2026, but analysts predict an emergency session may be called if the currency continues its freefall.
Additional reporting by our finance team
