Victor Ezeja
In response to the resurgence of inflationary pressure on Nigeria’s economy, the Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC), has again raised the Monetary Policy Rate (MPR), also known as the benchmark interest rate.
The CBN’s MPC resolved at the 298th meeting held in Abuja on 25 and 26 November 2024, to increase the benchmark interest rate by 25 basis points from 27.25 per cent to 27.50 per cent.
Join our WhatsApp ChannelAccording to a communique read by the CBN Governor, Dr Olayemi Cardoso, the MPC members voted to retain the Cash Reserve Ratio (CRR) at 50 per cent for Deposit Money Banks (DMBs) and 16 per cent for merchant banks, retain the Liquidity Ratio at 30 per cent and also retain the Asymmetric Corridor at +500/-100 basis points around the MPR.
The communique said all 12 MPC members in attendance unanimously approved the choices.
The CBN governor said the MPC meeting was held on the backdrop of renewed inflationary pressures.
Prime Business Africa had reported that the headline, food and core inflation rose year-on-year in October 2024.
While the headline inflation rate surged to 33.88 per cent from 32.70 per cent, food inflation hit 39.16 per cent in October 2024 against 31.52 per cent recorded in October 2023.
It observed that food prices remain a key contributor to the uptick in the inflation rate.
READ ALSO: Why CBN’s 22.75% MPR Hike Can’t Tame Inflation – CCPE
The Committee also noted the role of rising energy prices on the general price level due to its impact on factors of production.
It further observed that 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,” part of the communique read.
Prime Business Africa reports that this is the sixth consecutive time of raising the MPR since Cardoso assumed office as CBN governor.
In February, the CBN’s MPC hiked the MPR by 400 basis points from 18.75 per cent to 22.75 per cent. This was followed by subsequent hikes to 26.25 per cent in May, 26.75 per cent in July, and 27.25 per cent in September.
In total, Cardoso had hiked the MPR by 875 basis points.
Victor Ezeja is a passionate journalist with seven years of experience writing on economy, politics and energy. He holds a Master's degree in Mass Communication.
