The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) on Tuesday raised the Monetary Policy Rate (MPR), which benchmarks interest rates in the country to 27.50 per cent — from 27.25 per cent.
CBN governor, Olayemi Cardoso, made the announcement in a press briefing at the end of the committee’s two-day 298th meeting in Abuja.
The MPR, Cardoso said, was increased by 25 basis points, while the committee retained the asymmetric corridor at +500 and -100 basis points around the MPR.
The CBN governor said the MPC also retained the cash reserve ratio (CRR) at 50 per cent, as well as the liquidity rate at 30 per cent.
He explained that the MPR was raised to address price developments, adding that the MPC stressed the need to focus on the optimum policy choice to address the uptrend in price development, stabilise the exchange rate, and anchor inflation expectations appropriately.
“The committee 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 impact on income and welfare of citizens.
“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 northeast 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,” Cardoso said
The CBN governor further pointed out that “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.”
He said the committee was, however, optimistic that the full deregulation of the downstream subsector 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 synchronised objectives of price stability and sustainable growth.”
The CBN governor also said the committee was happy about the improvement in the external sector, reflected by the increase in the current account surplus, enhanced remittance, and capital inflows.
This, he added, has impacted the external reserves positively.
Cardoso also said the committee agreed that the key policy measures by both the monetary and fiscal authorities are yielding the desired outcomes.