By Tony Obiechina, Abuja
The Central Bank of Nigeria has further raised the Monetary Policy Rate (MPR) to 24.75 per cent.
The apex bank announce the decision at the 294th Monetary Policy Committee Meeting (MPC) held in Abuja on Tuesday.
In the February MPC meeting, the committee unanimously voted to raise the benchmark interest rate to 22.75 per cent considering surging inflation.
Experts had predicted another interest rate hike after inflation rose to 31.7 per cent in February up from 29.90 percent in January of 2024.
Speaking on the developnent the end of the MPC meeting, CBN Governor, Mr Yemi Cardoso said, “The decision of the MPC are as follows, to raise MPR 200 basis points to 24.75 from 22.75 per cent. Adjust the asymmetric corridor along the MPR at +100/300 basis point to -300 basis points. To maintain a cash reserve ratio of DMB at 45 per cent.
“Adjust the cash reserve ratio of merchant banks from 10 per cent to 14 per cent and retain the liquidity ratio at 30 per cent.”
Cardoso said the focus of the consideration was on the rising inflation, the need to anchor inflation expectations and ensure exchange rate stability.
Nigeria’s money supply hit a historic N95.56 trillion in Feb 2024 despite MPC’s tightening stance
Cardoso also said the decisions by the committee was to contain the money supply which has also contributed to inflation.
He said the committee voted to retain the Cash Reserve Ratio (CRR) at 45 per cent for commercial banks and adjust the CRR of merchant banks from 10 per cent to 14 per cent.
The committee also voted to retain the liquidity at 30 per cent.
According to him, the committee’s considerations focused on the current inflationary pressures and the need to anchor inflation expectations as well as ensure sustained exchange rate stability.
“These considerations underscore the importance of the ECB and its commitment to the price stability mandate and the need to urgently bring inflation under control to ensure that the purchasing power of ordinary Nigerians is restored in the short to medium term.
“Members noted the continued rise in headline inflation driven largely by food prices, because of supply shortages, and high cost of Logistics and Distribution. The committee, therefore, was of the view that addressing food insecurity is key to containing current inflationary pressures.
“On this note, members commended the ongoing efforts of the federal government towards addressing food insecurity. Some of these measures include the provision of various palliatives release of grains from the strategic reserves, distribution of seeds and fertilisers as well as farm implements for dry season farming.
“The committee therefore called for the full implementation of the federal government’s agricultural policies and programmes to improve food supply and further advised for broader fiscal consolidation, particularly on the improvements of tax collection and tax to GDP ratio,” he said.
Mr Cardoso said the committee will continue to monitor developments in the global and domestic economies to ensure that inflationary expectations are anchored to restore and sustain macroeconomic stability.
He announced that the next meeting of the MPC will be held on 20 and 21 May.
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