The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has raised the Monetary Policy Rate (MPR), which benchmarks interest rates, from 26.75 percent to 27.25 percent.
Olayemi Cardoso, CBN’s governor, announced the 50 basis points increase at a press conference on Tuesday after the committee’s 297th meeting in Abuja.
Cardoso said the increase was to further tame inflation.
On September 16, the National Bureau of Statistics (NBS) said Nigeria’s inflation rate declined to 32.15 percent in August — the second time in 2024.
Also, the CBN governor said the committee retained the asymmetric corridor at +500 and -100 basis points around the MPR.
He said the committee also increased the cash reserve ratio (CRR) from 45 percent to 50 percent, while retaining the liquidity rate at 30 percent.
Cardoso said the MPC agreed to increase monitoring of future releases with a view to addressing its effect on price developments.
He also said the committee noticed the relative stability and convergence in the exchange rate across the various market segments resulting from the bank’s tight monetary policy stance.
The CBN governor said it will help improve confidence, which will enable economic agents to plan in the medium to long term.
“The committee was, however, unanimous in recognising that a lot more is required to actualise the bank’s price stability mandate,” he said.
“The MPC noted that even though headline inflation trended downwards due to a moderation in food inflation, core inflation has remained elevated, driven primarily by rising energy prices.
“The uptrend poses severe concerns to members as it clearly indicates the persistence of inflationary pressures. Members thus reiterated the need to work in close collaboration with the fiscal authority to address the current upward pressure on energy prices.
“The MPC noted the continued growth in money supply, recognising the need to curtail excess liquidity in the system as well as address foreign exchange demand pressures.”
Cardoso said the MPC was worried about the fiscal deficits.
However, he said the federal government has pledged not to resort to ways and means for monetary financing.
“Members were also concerned about the growing level of fiscal deficit but acknowledged the commitment of the fiscal authority not to resort to monetary financing through ways and means,” he said.
