The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) at the end of its two-day meeting in Abuja on Tuesday raised the Monetary Policy Rate (MPR) by 200bps to 24.75% and also changed the asymmetric corridor from +100/-700 t0 +100/-300 around the MPR.
Today’s upward review of the (MPR), which is the benchmark lending rate for banks, was the 10th consecutive time the committee jacked it up since May 2022
The committee, however, retained the CRR of Commercial banks at 45.00% and the liquidity ratio constant at 30.00% but adjusted the CRR upwards for Merchant banks from 10% to 14%.
At the meeting which was the second to be held by the MPC this year, the CBN governor, Yemi Cardoso, hinged the decisions of the committee on current macroeconomic indices in the domestic economy and global economic factors, amongst other factors.
Speaking on the factors that informed the MPC members’ latest monetary policy decisions, Cardoso explained that the measures were needed to control inflation to ensure that ordinary Nigerians’ purchasing power is restored in the short to medium term.
He said: “Members noted the continued rise in headline inflation was driven largely by food prices because of supply shortages and high cost of logistics distribution.”
According to him, members of the committee considered it imperative to address the lingering food insecurity with the attendant implications for reducing the current inflationary pressures.
Cardoso has consistently maintained that consecutive rate hikes would address Nigeria’s inflation issues at nearly a three-decade high. However, analysts are unsure whether more hikes are needed.
Analysts believe that the apex bank’s decisions on the benchmark lending rate and others reaffirmed the apex bank’s sustained hawkish stance in monetary measures aimed at moderating the inflationary pressures in the economy.
