The Central Bank of Nigeria (CBN) has increased the Monetary Policy Rate (MPR), which benchmarks interest rates, to 26.75 per cent.

The interest rate was raised by the Monetary Policy Committee (MPC) of the CBN from 26.25 per cent to 26.75 per cent.

CBN Governor Olayemi Cardoso announced this at the end of the committee’s 296th meeting in Abuja on Tuesday, July 23, 2024.

Cardoso also announced that the MPC adjusted the asymmetric corridor around the MPR to +500/-100 from +100/-300 basis points AND retained the Cash Reserve Ratio (CRR) of commercial banks at 45 per cent.

According to him, the committee also retained the CRR and Liquidity Ratio of merchant banks at 14 per cent and 30 per cent, respectively.

Cardoso disclosed that the meeting, which had 11 members of the MPC present, reviewed recent economic and financial developments, and assessed risks to the outlook.

The CBN Governor noted that the committee was mindful of the effect of rising prices on households and businesses, and also expressed its resolve to take necessary measures to bring inflation under control.

He said: “It re-emphasised its commitment to the CBN’s price stability mandate and remained optimistic that despite the June uptick in headline inflation, prices are expected to moderate in the near term.

NACCIMA lists effects of interest rate hike on businesses

“This is hinged on monetary policy gaining further traction, in addition to recent measures by the fiscal authority to address food inflation.

“In its consideration, the committee noted the persistence of food inflation, which continues to undermine price stability.

“It was observed that while monetary policy has been moderating aggregate demand, rising food and energy costs continue to exert upward pressure on price development.”

Cardoso added that the prevailing insecurity in food producing areas and high cost of transportation of farm produce were also contributing to this trend.

The CBN Governor said the members were, therefore, not oblivious to the urgent benefit of addressing these challenges as it will offer a sustainable solution to the persistent pressure on food prices.

Cardoso said the MPC also had in consideration the increasing activities of middlemen who often finance smallholder farmers, aggregate, hoard, and move farm produce across the border to neighbouring countries.

He stated that the committee suggested the need to put in check such activities to address the food supply deficit in the Nigerian market to moderate food prices.

The Star