The Central Bank of Nigeria (CBN) has decided to further increase its Monetary Policy Rate (MPR), to 27.25%, in a bid to fortify confidence in the economy.
This is the fifth consecutive time this year that the apex bank will be increasing its benchmark interest rate.
CBN made the announcement on Tuesday during the Monetary Policy Committee (MPC) meeting chaired by CBN Governor, Yemi Cardoso
Cardoso noted that the move, aimed at improving confidence in the economy will among other things help quell inflation, support the naira and attract investments, all of which he hoped will enable economic agents to plan in the medium to long term.
“The committee was, however, unanimous in recognising that a lot more is required to actualise the bank’s price stability mandate,” he noted.
“The MPC noted that even though headline inflation trended downwards due to a moderation in food inflation, core inflation has remained elevated, driven primarily by rising energy prices.
“The uptrend poses severe concerns to members as it clearly indicates the persistence of inflationary pressures. Members thus reiterated the need to work in close collaboration with the fiscal authority to address the current upward pressure on energy prices.
“The MPC noted the continued growth in money supply, recognising the need to curtail excess liquidity in the system as well as address foreign exchange demand pressures.”
Cardoso said MPC was concerned about the fiscal deficits, stressing that multiple rate hikes have served to moderate inflation, while expressing their commitment to hold inflation down.
He disclosed that the federal government has pledged not to resort to ways and means for monetary financing.