Barbara Bako, Abuja.
The Central Bank of Nigeria (CBN) has once again raised the Monetary Policy Rate to 26.25 per cent from the 24.75 per cent.
The CBN Governor, Olayemi Cardoso who is also the Monitory Policy Committee (MPC) chairman said this on Tuesday after the two day MPC meeting held in Abuja.
He said that the MPC decided, “Raise the MPR by 150 basis points to 26.25 per cent from 24.75 per cent, retain the asymmetric corridor around the MPR to +100/-300 basis points.”
The CBN boss said that the MPC, “Retain the Cash Reserve Ratio of Deposit Money Banks at 45.00 per cent, Retain the Liquidity Ratio at 30.00 per cent.
Shedding light on the key focus of the MPC at this meeting Cardoso said “Remained to achieve price stability by effectively using tools available to the monetary authority to rein in inflation.
He said “Members observed that while year-on-year headline inflation in April 2024 rose moderately, the month-on-month measures of headline, food and core all declined significantly.”
“This follows a decline (month-on-month) of headline and CBN food measures in March 2024, suggesting that the recent tight monetary policy stance of the Bank is beginning to yield the desired outcomes,” he added.
The CBN boss however said the MPC Noted that the inflationary pressure continues to be driven largely by food inflation thus reiterates several challenges confronting the effective moderation of food inflation.
Which according to him includes: rising cost of transportation of farm produce; infrastructure-related constraints along the line of distribution network; security challenges in some food producing areas; and exchange rate pass-through to domestic prices for imported food items.
Cardoso also said, “MPC urged that more be done to address the security of farming communities to guarantee improved food production in these areas.”
“Members further observed the recent volatility in the foreign exchange market, attributing this to seasonal demand, a reflection of the interplay between demand and supply in a freely functioning market system,” he said.
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The CBN boss said “The Committee also noted the marginal increase in the external reserve balance between March and April 2024 and urged the bank to sustain its focus on accretion to reserves.”
Furthermore, in this meeting he said, “Thue Committee was thus faced with the option of either continuing with
policy tightening or hold to observe the impact of previous rate hikes.
Following an extensive review of risks and the near-term inflation outlook, Cardoso said, “The balance of risks suggests further tightening of policy to build on the benefits accruing from
previous rate hikes.”
The CBN Governor said that all 12 members attended the meeting while announcing that the next meeting of the Committee will hold on the 22nd and 23rd of July 2024.
