The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has increased the Monetary Policy Rate (MPR) to 18 per cent from 17.5 per cent.
The CBN Governor, Godwin Emefiele, said this on Tuesday while reading the communique issued at the end of the MPC’s 290th meeting.
This is the 6th consecutive increase of the MPR, which is the baseline interest rate in an economy.
At the last MPC meeting in January, it was increased by 100 basis points, from 16.5 per cent to 17.5 per cent.
According to Emefiele, 10 out of the 12 committee members present at the meeting voted for a moderate rise in the MPR
The CBN, however, said all other parameters remained constant.
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The Asymmetric Corridor of +100/-500 basis points around the MPR, the Liquidity Ratio of 30 per cent, and Cash Reserve Ratio (CRR) of 32.5 cent were thus retained.
Emefiele stated that the committee debated whether to continue the rate hike to further check inflation, adding that the MPC also considered whether to hold the rate to observe emerging developments and allow for the impact of the last five rate hikes to permeate the economy.
“Loosening in the view of the committee members would undermine gains so far achieved
“MPC observed the upward risk to price development and expectations of the removal of the Premium Motor Spirit (PMS) subsidy.
“These, in the view of members, provide a compelling argument for an upward adjustment of policy rate, albeit less aggressively,” he said.
Emefiele noted that the apex bank’s naira redesign and cash withdrawal policies had resulted in a sizeable reduction in currency outside the banking system.
“This is an indication of improvement in the potency of monetary policy tools of the CBN,” he added
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