The Central Bank of Nigeria (CBN) has raised its Monetary Policy Rate (MPR) by 50 basis points, increasing it from 26.75% to 27.25% as a way of controlling the nation’s surging inflation, which currently stands at 32.15%, News About Nigeria reports.
CBN Governor Olayemi Cardoso announced this decision following the 297th Monetary Policy Committee (MPC) meeting held in Abuja on September 23rd and 24th.
The committee met to review recent economic and financial trends and assess the outlook for the rest of the year.
“The committee was unanimous in its decision to further tighten policy and decided to raise the MPR to 27.25%,” said Cardoso.
In addition to raising the MPR, the MPC also increased the Cash Reserve Ratio (CRR) for Deposit Money Banks (DMBs) by 50 basis points, moving it from 45% to 50%.
For merchant banks, the CRR was raised from 14% to 16%. The liquidity ratio (LR) was maintained at 30%, while the asymmetric corridor was retained at +500/-100 basis points around the MPR.
Governor Cardoso said that the series of interest rate hikes over the past year have been instrumental in moderating inflation, which has plagued the country’s economy.
“There is no economic model that can lift people out of poverty when inflation is accelerating at the level we have seen. For this reason, we remain committed to bringing it under control,” he stated.
Cardoso also said that the MPC observed moderation in headline inflation on a year-on-year basis in July and August.
He further noted the relative stability and convergence in Nigeria’s exchange rate across various market segments, which he attributed to the CBN’s tight monetary policy stance.
“The Committee noted the moderation in headline inflation year-on-year in July and August.
“In addition, the MPC noted the relative stability and convergence in the exchange rate across the various market segments, resulting from the apex bank’s tight monetary policy stance.
“This is expected to improve confidence, which will enable economic agents to plan in the medium to long term,” he said.
