The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has further increased the Monetary Policy Rate (MPR) by 50 basis points to 27.25 per cent from 26.75 per cent.
The CBN Governor, Olayemi Cardoso, made this known while reading the communique from the 297th meeting of the MPC in Abuja on Tuesday, September 24, 2024.
Cardoso announced that the committee also decided to raise the Cash Reserved Ratio (CRR) by 50 basis points from 45 per cent to 50 per cent for Deposit Money Banks (DMBs), while it is 14 per cent to 16 per cent for merchant banks.
He stated that the committee however retained the liquidity ratio at 30 per cent, and also retained the asymmetric corridor at +500/-100 basis points around the MPR.
Cardoso, who is also the Chairman of the MPC, said the decision by the committee of the apex bank was unanimous.
He disclosed that 11 of the 12-member committee present at the meeting approved the decision to increase the interest rate.
Cardoso announced that the MPC decided to raise the baseline interest rate also known as the MPR for the fifth consecutive time, by 50 basis points from 26.75 per cent to 27.25 per cent.
The CBN boss added: “The committee noted the moderation in headline inflation year-on-year in July and August.
“In addition, the MPC noted the relative stability and convergence in the exchange rate across the various market segments, resulting from the apex bank’s tight monetary policy stance.
“This is expected to improve confidence, which will enable economic agents to plan in the medium to long term.”
Stock market investors record N79bn gain
Cardoso stated that the committee was, however, unanimous in recognising that a lot more was required to actualise the price stability mandate of the CBN.
Cardoso 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.”
He said the committee was also concerned about the need to mop up excess liquidity, address foreign exchange demand, as well as growing fiscal deficit.
The CBN Governor, however, ruled out the Ways and Means option in addressing the deficit.
Cardoso added: “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.
“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.
“Furthermore, members observed a strong correlation between Federation Accounts Allocation Committee (FAAC) releases and liquidity levels in the banking system as well as its impact on the exchange rate.
“The Committee, therefore, agreed to increase monitoring of future releases with a view to addressing its effects on price developments.”
- Uba Sani: Remi Tinubu, compassionate First Lady - December 19, 2024
- EFCC summons suspended Edo LG chairmen - December 19, 2024
- N110bn fraud: Court grants Yahaya Bello N500m bail - December 19, 2024
