The Central Bank of Nigeria (CBN) has increased its Monetary Policy Rate (MPR) to 27.25%.
According to a statement, the decision was made during the Monetary Policy Committee (MPC) meeting chaired by CBN Governor, Yemi Cardoso on Tuesday.
In July 2024, the CBN raised its MPR by 800 basis points to 26.75 percent, up from 13 percent in May 2022.
Stressing that the move will help improve confidence, and enable economic agents to plan in the medium to long term, the CBN governor said, “The committee was, however, unanimous in recognizing 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, recognizing the need to curtail excess liquidity in the system as well as address foreign exchange demand pressures.”
While noting that the MPC was worried about the fiscal deficits, he however, he said the federal government has pledged not to resort to ways and means for monetary financing.
“Members were also concerned about the growing level of the fiscal deficit but acknowledged the commitment of the fiscal authority not to resort to monetary financing through ways and means,” he said.
Also, the apex bank head commended the federal government over the effort put into stabilizing food prices.
He said the committee expressed optimism that “the lifting of refined petroleum products from Dangote Petroleum Refinery will moderate transportation costs and significantly support the easing of food price pressures in the short to medium term.
“This is also expected to moderate foreign exchange demand for importation of refined petroleum products, with a positive spillover on external reserve and improvement in the overall balance of payment position,” he said.
