The Central Bank of Nigeria, CBN, has increased the monetary policy rate, MPR, from 27.25 per cent to 27.50 per cent to address the nation’s persistent inflation.
This decision was announced during the Monetary Policy Committee, MPC, meeting held at the apex bank’s headquarters in Abuja on Tuesday.
The MPR is the benchmark interest rate used by the CBN to regulate lending and borrowing in the economy. By raising the MPR, the CBN aims to control inflation by making borrowing more expensive and encouraging savings.
CBN Governor Yemi Cardoso stated that the MPC unanimously voted to raise the MPR by 25 basis points.
He said the cash reserve ratio—the proportion of a bank’s total deposits that must be held with the CBN—remains at 50 per cent for Deposit Money Banks and 16 per cent for Merchant Banks.
The liquidity ratio, which measures the ability of banks to meet their short-term obligations, was retained at 30 per cent. The asymmetric corridor, which sets limits for interest rates around the MPR, was maintained at +500/-100 basis points.
“The Committee was unanimous in its agreement to raise the monetary policy rate by 25 basis points to 27.50 per cent,” Cardoso said.
He noted that the decision was taken against the backdrop of renewed inflationary pressures, with headline, food, and core inflation rising year-on-year in October 2024.
“Members therefore agreed unanimously to remain focused on addressing price developments,” Cardoso added.
This marks the sixth MPR hike in 2024. In September, the rate was raised to 27.25 per cent after a slight drop in inflation.
However, inflation levels climbed again in October, reaching 33.88 per cent, up from 32.7 per cent in September, according to the National Bureau of Statistics, NBS.
The NBS attributed the increase to higher transportation costs and food prices, noting that October’s headline inflation rate was 6.55 percentage points higher year-on-year compared to October 2023’s 27.33 per cent. The report also reflected a month-on-month rise of 1.18 percentage points.
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