By Mary Onyia
The Central Bank of Nigeria (CBN) on Tuesday following its Monetary Policy Committee meeting in Abuja raised the benchmark interest rate, the Monetary Policy Rate, MPR, to 27.50 percent from 27.25 percent, to further check inflation.
Speaking at the end of the 298th MPC meeting, the CBN Governor, Mr. Olayemi Cardoso also disclosed that the nation’s External Reserves increased from $40.06billion to $40.88billion as of the end of October 2024, even as he noted that the committee was in agreement at the decisions reached to secure the policy.
He said: “The committee was unanimous in its decision to tighten the policy further and thus decided as follows: Raise the MPR by 25 basis points to 27. 50 percent from 27. 25 percent.
“Retain the Asymmetric Corridor around the MPR at +500 / -100 basis points. Retain the Cash Reserve Ratio, CRR of Deposit Money Banks at 50 percent and Merchant Banks at 16 percent; and retain the Liquidity Ratio at 30 percent.”
Giving reasons why they hiked the interest rates, Dr. Cardoso said the committee decided to further hike the rate because of the renewed inflationary pressures as the headline, food, and core measures rose Year-on-Year last month, citing the latest report of the National Bureau of Statistics (NBS).
“The committee was particularly concerned that all three measures inched up monthly. They proposed persistent price pressures with attendant adverse impacts on the income and welfare of citizens. Members therefore agreed unanimously to remain focused on addressing price developments,” he emphasized.
He was hopeful that the results of CBN policies, citing the increased remittances as a clear indication that his administration’s policies were achieving the desired results.
Cardoso said: “The committee noted the improvement in the external sector, reflected in the Current Account surplus, enhanced remittance, and capital inflows which have impacted the External Reserves positively. These, therefore, suggest that key policy measures by both the monetary and fiscal authorities are yielding the desired outcomes.
The CBN Governor however, expressed his unease over the continued strain in the exchange rate, indicating a persistent hike in its demand in the market, adding that the bank was looking to explore measures to boost market liquidity.
He said the stable naira since June was an important parameter for a stable, growing economy, stressing, “If you measure stability between June and now, it has been stable.”
Mr. Cardoso noted that there would normally be a time lag between policy implementation and outcomes noting that that greater results would be witnessed in the first quarter of next year.