Economy
Anthony Isibor
THE Central Bank of Nigeria, CBN, has at end of its 298th Monetary Policy Committee, MPC, meeting held on Monday and Tuesday resolved to raise the MPR by 25 basis point.
According to the circular signed by Olayemi Cardoso Governor, CBN, this increases the MPR from it’s initial 27.25% to 27.50%.
At the meeting, which was attended by all the 12 members of the Committee, the CBN also unanimously resolved to retain the asymmetric corridor around the MPR at +500/-100 basis points, retain the Cash Reserve Ratio of Deposit Money Banks at 50.00 per cent and Merchant Banks at 16 per cent and retain the Liquidity Ratio at 30.00 per cent.
Realnews reports that the meeting was held on the backdrop of renewed inflationary pressures, as the headline, food and core measures rose year-on-year in October 2024.
“The Committee was particularly concerned that all three measures also inched up on a month-on-month basis, suggesting the persistence of price pressures, with attendant adverse impacts on income and welfare of citizens. Members, therefore agreed unanimously to remain focused in addressing price developments.
“While food prices remain a key contributor to the uptick, members commended the efforts of the Federal Government for the improved security, especially in the North-East of the country, which would likely improve food production.
“The Committee also noted the role of rising energy prices on the general price level due to its impact on factors of production. The recent increase in the price of Premium Motor Spirit, PMS, has also impacted the cost of production and distribution of food items and manufactured goods. The Committee was optimistic that the full deregulation of the downstream sub-sector of the petroleum industry would eliminate scarcity and stabilise price levels in the short to medium term. Members thus, reiterated the need to strongly forge ahead with the deepening collaboration between the monetary and fiscal authorities to ensure the achievement of our synchronized objectives of price stability and sustainable growth.
“The Committee noted the improvement in the external sector, reflected by the increase in the current account surplus, enhanced remittance and capital inflows which have impacted the external reserves positively. This, therefore, suggests that key policy measures by both the monetary and fiscal authorities are yielding the desired outcomes. Members, however, expressed concern over persisting exchange rate pressure, reflecting continued high demand in the market. Consequently, the Committee urged the Bank to explore measures to boost market liquidity.
“Members noted with satisfaction the continued resilience and stability of the banking system despite significant exogenous and endogenous headwinds. Key financial soundness indicators such as the Capital Adequacy Ratio, CAR,, Non-Performing Loan ratio, NPL, Liquidity Ratio, LR, amongst others, remain strong. The MPC, however, called on the Bank to maintain its close surveillance on the banking system to sustain compliance with regulatory thresholds and continued health of the industry,” the statement said.
However, the MPC acknowledged the efforts of the Bank in deepening financial inclusion, towards improving the transmission mechanism of monetary policy to enhance policy effectiveness.
A.I
Nov. 27, 2024
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