The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) on Tuesday raised interest rate to 27.50%, up from 27.25%.
The Governor of the CBN, Mr. Olayemi Cardoso, announced after the two-day meeting of the MPC that the committee resolved to raise the MPR by 25 basis point.
According to the circular issued after the meeting, the 12 members of the Committee unanimously resolved to retain the asymmetric corridor around the MPR at +500/-100 basis points, retain the Cash Reserve Ratio of Deposit Money Banks at 50.00% and Merchant Banks at 16 per cent and retain the Liquidity Ratio at 30.00%.
The meeting of the MPC was held on the backdrop of renewed inflationary pressures, as the headline, food and core measures rose year-on-year in October 2024.
The Committee therefore said that it was particularly concerned that all three measures also inched up on a month-on-month basis, suggesting the persistence of price pressures, with attendant adverse impacts on income and welfare of citizens.
The members, therefore agreed unanimously to remain focused in addressing price developments.
“While food prices remain a key contributor to the uptick, members commended the efforts of the Federal Government for the improved security, especially in the North-East of the country, which would likely improve food production.
“The Committee also noted the role of rising energy prices on the general price level due to its impact on factors of production. The recent increase in the price of Premium Motor Spirit, PMS, has also impacted the cost of production and distribution of food items and manufactured goods. The Committee was optimistic that the full deregulation of the downstream sub-sector of the petroleum industry would eliminate scarcity and stabilise price levels in the short to medium term. Members thus, reiterated the need to strongly forge ahead with the deepening collaboration between the monetary and fiscal authorities to ensure the achievement of our synchronized objectives of price stability and sustainable growth,” the circular said.
The Committee noted the improvement in the external sector, reflected by the increase in the current account surplus, enhanced remittance and capital inflows which have impacted the external reserves positively.
“This, therefore, suggests that key policy measures by both the monetary and fiscal authorities are yielding the desired outcomes. Members, however, expressed concern over persisting exchange rate pressure, reflecting continued high demand in the market. Consequently, the Committee urged the Bank to explore measures to boost market liquidity,” it added
GIK/APA