The Central Bank of Nigeria has raised the Monetary Policy Rate (MPR) by 400 basis points to a record 22.75 per cent.
This is the highest level the MPR has been raised to.
Prior to the meeting which is the first since the last one held in July 2023 as well as the first since the appointment of CBN governor, Olayemi Cardoso, the MPR was18.75 per cent.
The apex bank also increased the Cash Reserve Ratio to 45 per cent and maintained the liquidity ratio at 30 per cent, while the asymmetric corridor was raised to +200/-700.
CBN governor, Olayemi Cardoso, who disclosed this at the end of the Monetary Policy Committee (MPC) meeting in Abuja, said the increase was borne out of the need to address rising inflation in the country especially as prior rate increases were not substantial enough to impact on inflation rate.
He said the committee also increased the cash reserve ratio (CRR) from 32.5 per cent to 45 per cent, while retaining the liquidity rate at 30 per cent.
Speaking on inflation, Cardoso said the rate of change in prices of goods and services rose to 29.9 per cent in January 2024 — up from 28.92 per cent in the previous month.
According to him, members considered various scenarios including whether to hold or hike policy and concluded that inflation could become more persistent in the medium term and pose more regulatory issues if not well-anchored.
Cardoso attributed the rise in inflation to major factors such as rising costs of energy, high fiscal deficits and lingering security challenges in major food-producing areas.
“In addition, global factors such as tight financial conditions, and trade disruptions from ongoing geopolitical tensions remain significant upside risks to the outlook for domestic inflation. Forecasts therefore, indicate that inflation will remain on an upward trajectory in the near term, before commencing a descent,” he said.
He, therefore, said the committee will continue to put measures in place to boost investor confidence and attract capital inflows as well as continue to monitor developments in the global and domestic economies to ensure that inflationary and exchange rate pressures moderate in the near term.
Cardoso also said the next MPC meeting will be held on March 25 and March 26.
