Economy
…says inflationary pressure continues to be driven largely by food inflation.
By Anthony Isibor
THE Central Bank of Nigeria, CBN, has increased its Monetary Policy Rate, MPR to 26.25% from 24.75 per cent.
This was part of the decision reached at it’s 295th Monetary Policy Committee, MPC, meeting held on 20th and 21st of May 2024.
The CBN also retained the asymmetric corridor around the MPR to +100/-300 basis points, retained the Cash Reserve Ratio of Deposit Money Banks at 45.00 per cent, and retained the Liquidity Ratio at 30.00 per cent.
According to the communique issued at the end of the meeting and signed by Olayemi Cardoso, the focus of the MPC at the meeting remained to achieve price stability by effectively using tools available to the monetary authority to rein in inflation.
He said that members observed that while year-on-year headline inflation in April 2024 rose moderately, the month-on-month measures of headline, food and core all declined significantly. This follows a decline (month-on-month) of headline and food measures in March 2024, suggesting that the recent tight monetary policy stance of the Bank is beginning to yield the desired outcomes.
The MPC, however, noted that the inflationary pressure continues to be driven largely by food inflation.
It therefore called for the effective moderation of food inflation by focusing on the rising cost of transportation of farm produce, infrastructure-related constraints along the line of distribution network, security challenges in some food producing areas, and exchange rate pass-through to domestic prices for imported food items.
The MPC urged that more be done to address the security of farming communities to guarantee improved food production in these areas.
The Committee also noted the marginal increase in the external reserve balance between March and April 2024 and urged the Bank to sustain its focus on accretion to reserves.
It commended the Bank for the recent approval of licenses of 14 international Money Transfer operators, IMTOs.
It said that this was expected to improve competition and lower the cost of transactions, thus attracting more remittances through formal channels.
The Committee noted with satisfaction that the banking system remains safe, sound and stable, despite the headwinds confronting the economy, and commended the recent recapitalization initiative and urged the management to sustain its regulatory oversight to ensure the continued stability of the banking system.
A.I
may 21, 2024 @ 19:08 GMT
Tags: MPR Olayemi Cardoso
