Nigeria raises interest rate to 27.25% --[Reported by Umva mag]

The Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, has announced an increase of the Monetary Policy Rate (MPR) by 50 basis points to 27.25% from the previous rate of 26.75%.

The communique issued at the end of the 297th Monetary Policy Committee, (MPC) meeting held on the 23rd and 24th of September 2024 in Abuja, said that the members of the MPC reviewed recent economic and financial developments as well as assess risks to the outlook and resolved to retain the asymmetric corridor around the MPR at +500/-100 basis points.

They 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

Cardoso said that the Committee was unanimous in its decision to further tighten monetary policy since there was moderation in headline inflation year-on-year in July and August 2024.

According to the CBN governor, the committee 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, the committee 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,” the communique added.

GIK/APA

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