Victor EzejaThe Central Bank of Nigeria’s (CBN) monetary policy committee has increased the benchmark interest rate, known as the Monetary Policy Rate (MPR), from 26.25 per cent to 26.75 per cent.
This was announced by the CBN Governor, Dr Olayemi Cardoso, at the end of the MPC 296th meeting in Abuja on Tuesday.
Join our WhatsApp ChannelThe MPR serves as the baseline interest rate in an economy, upon which all other interest rates on lending by financial institutions are based.
Cardoso said the committee members voted to hike the rate by 50 basis points to 26.75 per cent, adjust the asymmetric corridor to +500 and -100 basis points around the MPR.
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The committee retained the cash reserve ratio (CRR) at 45 per cent, and liquidity ratio at 30 per cent.
The measure by the monetary authority is aimed at bringing down inflation which has continued to surge, creating cost of living crisis for the residents.
Last week, Nigeria’s inflation rate rose to 34.19 per cent mostly induced by high food prices.
The CBN governor also said the committee was mindful of the effect of rising prices on households and businesses, and “is resolved to take necessary measures to bring inflation under control.”
The committee, according to Cardoso, reiterated its commitment to the bank’s duty of ensuring price stability and expressed optimism that prices would soon decline despite the headline inflation spike in June 2024.
“This is hinged on monetary policy, gaining further traction in addition to recent measures by the fiscal authority to address food inflation.
“In his 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 prices development.”
The apex bank governor added that the committee also noted that the insecurity in food producing areas and high cost of transportation of farm produce are also contributing to the the inflation and called for urgent measures to tackle the situation and resolve the persistent pressure on food prices.
Victor Ezeja is a passionate journalist with six years of experience writing on economy, politics and energy. He holds a Masters degree in Mass Communication.
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