Economy, Featured
By Anthony Isibor
THE Central Bank of Nigeria, CBN, has announced an increase of the Monetary Policy Rate, MPR, by 50 basis points to 27.25% from the previous rate of 26.75%.
This was part of the decision at its 297th Monetary Policy Committee, MPC, meeting held on the 23rd and 24th of September 2024.
The meeting, which focused on the review of recent economic and financial developments as well as assess risks to the outlook, also retained the asymmetric corridor around the MPR at +500/-100 basis points, raised the Cash Reserve Ratio of Deposit Money Banks by 500 basis points to 50.00 per cent from 45.00 per cent and Merchant Banks by 200 basis points to 16 per cent from 14 per cent, and also retained the Liquidity Ratio at 30.00 per cent
According to the communique released at the end of the two-day meeting and signed by Olayemi Cardoso, Governor, CBN, the Committee was unanimous in its decision to further tighten policy
The communique, which was sighted by Realnews, also revealed that there was moderation in headline inflation year-on-year in July and August 2024.
It also noted the relative stability and convergence in the exchange rate across the various market segments, resulting from the Bank’s tight monetary policy stance.
However, it noted that this is expected to improve confidence which will enable economic agents to plan in the medium to long term.
The Committee was also unanimous in recognising that a lot more is
required to actualize the Bank’s price stability mandate.
“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. Members were also concerned about the growing level of fiscal deficit, but acknowledged the commitment of the fiscal authority not to resort to monetary financing through Ways & Means. Furthermore, members observed a strong correlation between FAAC releases and liquidity levels in the banking system as well as its impact on the exchange rate.
“The Committee, therefore, agreed to increase monitoring of future releases with a view to addressing its effects on price developments.” the statement said.
24th September, 2024.
C.E.
Tags: Central Bank of Nigeria
