The monetary policy committee of the Central Bank of Nigeria (CBN) has increased the Monetary Policy Rate (MPR) by 50 basis points, raising it from 26.25% to 26.75% in response to galloping inflation.
The new rate was announced by Olayemi Cardoso, the governor of the Central Bank of Nigeria, on Tuesday following the committee’s 296th meeting in Abuja.
The MPC adjusted the asymmetric corridor around the MPR from +100 to -300 to +500 to -100 basis points. The adjustment comes as Nigeria’s inflation rate surged to 34.19% in June, driven by skyrocketing food prices.
The MPC also retained the Cash Reserve Ratio (CRR) of deposit money banks at 45% and merchant banks at 14% and retained the Liquidity Ratio at 30%.
What Cardoso said:
“The committee was mindful of the effect of rising prices on household and businesses and expressed its resolve to take necessary measures to bring inflation under control,”
“It re-emphasises a commitment to the bank’s price stability mandate and remains optimistic that despite the June 2024 uptick in headline inflation, prices are expected to moderate in the near term,” he stated.
The CBN chief stated that the MPC committee would persist in tightening rates, using this approach as a primary tool to address inflationary pressures.
The persistent rate increases in recent times have not passed without criticism from Nigerians facing the toughest economic reality ever.
For the last interest rate hike, Peter Obi, the presidential candidate of the Labour Party in the last general election, criticized the increase of the MPR to 22.5% and the Cash Reserve Ratio (CRR) to 45%, arguing that the move would adversely affect the already fragile economy.
