The Central Bank of Nigeria (CBN) concluded its 2-day Monetary Policy Committee’s (MPC’s) 303rd meeting on Tuesday with the retention of the Monetary Policy Rate (MPR) at 27 percent, maintaining its hawkish monetary stance as part of its efforts to moderate the general price level in the economy and stabilise the foreign exchange (FX) market.
The MPR, which serves as the benchmark interest rate in the economy, has remained been on the spiking trend as the apex bank continues its regulatory measures to curb rising inflation in the economy and restore investor confidence.
According to the decisions taken at the meeting, apart from the retention of the MPR at 27.00%, the MPC also retained Cash Reserve Ratio (CRR) at 45.00% for DMBs, and 16.00% for Merchant Banks, and also left the CRR on Non-TSA public sector deposits at 75%, Liquidity Ratio at 30.0% but adjusted the Asymmetric Corridor by +50/-450 basis points around the MPR.
Speaking on the key decisions taken by the committee, the CBN Governor, Olayemi Cardoso, who also presided over the discussions, explained that the committee’s choice to hold the rate reflected its assessment that current monetary conditions are beginning to yield positive results.
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He pointed out that the gradual moderation in headline inflation and improved FX market liquidity were considered by the MPC as indicators that the tightening measures were working.
The CBN governor further clarified that although inflationary pressures continued to persist, stressing that maintaining the MPR at 27% provided necessary support for sustaining the downward movement in prices while anchoring expectations in the financial markets.
According to him, the key decisions were fully supported by the majority of MPC members.
Cardoso disclosed that the standing facilities corridor (SFC) around the MPR was adjusted by the committee members to +50/-450 basis points, narrowing the upper band and expanding the lower band to give the apex bank greater flexibility in managing overnight lending and deposit activities.
In addition, he confirmed that the Committee also voted to retain the Cash Reserve Ratio (CRR) for commercial banks at 45%, while that of merchant banks was maintained at 16%, demonstrating the apex bank’s commitment to efficient liquidity system management.
It would be recalled that the MPC had at its last 302nd meeting reduced the MPR by 50 basis points from 27.5% it earlier stood and also adjusted the asymmetric corridor at to +250/-250 basis points, down from the previous +500/-100 range.
