By Tony Obiechina, Abuja
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) on Tuesday raised the monetary policy rate (MPR), which measures interest rate, from 17.5 percent to 18 percent.
The CBN Governor, Mr Godwin Emefiele who disclosed this after the MPC meeting in Abuja said a moderate tightening may slow the rate of deceleration in inflation without necessarily hurting output.
This development comes amid lingering cash scarcity across the country.
Nigeria’s inflation rate accelerated to 21.91 percent in February 2023 from 21.82 in January, fueled essentially by cost of energy, food and Naira scarcity, according to the National Bureau of Statistics (NBS).
Data from the NBS showed that Nigeria’s annual Gross Domestic Product (GDP) growth rate slowed to 3.10 per cent in 2022, compared to 3.40 per cent in 2021.
The MPC also retained the asymmetric corridor at +100/-700 basis points around the MPR, and the Cash Reserve Ratio (CRR) at 32.5 percent and liquidity ratio at 30 percent.
Commenting on the development, a University don, Prof Uche Uwaleke said the CBN must have arrived at the decision bearing in mind the rising inflation and the pressure in the Forex market.
In a statement made available in Abuja on Tuesday, the Professor of Capital market said: “It is apparent the MPC is still concerned about rising inflation and the pressure in the forex market against the backdrop of its primary mandate of maintaining price stability.
“However, I had expected MPC to maintain a hold position considering the significant drop in currency in circulation occasioned by the currency redesign policy and the fact inflation rate actually decelerated month on month between January and February 2023.
“The adverse impact of the recent cash scarcity on productive activities as well as the conclusion of election season should have provided justification for a hold position.
“That said, i think that the iincrease in the MPR by 50 basis points is a signal to financial markets that the CBN has begun the process of rate-hike pause and I expect that a complete halt in policy tightening will most likely happen at the next scheduled meeting of MPC in May.
“This is necessary in order to stimulate economic activities and create job opportunities”.
