The Monetary Policy Committee (MPC) of the Central Bank of Nigeria’s (CBN) has raised the baseline interest rate by 50 basis points to 26.75% from 26.25%.
This decision was made at the end of its 296th meeting on July 22-23, 2024, attended by eleven members.
The committee also adjusted the asymmetric corridor around the MPR to +500/-100 from +100/300 basis points, retained the Cash Reserve Ratio of Deposit Money Banks at 45.00% and Merchant Banks at 14%, and retained the Liquidity Ratio at 30.00%.
The MPC noted the persistence of food inflation, which continues to undermine price stability, and expressed its resolve to take necessary measures to bring inflation under control.
The committee emphasized its commitment to the Bank’s price stability mandate and remained optimistic that prices are expected to moderate in the near term.
The MPC also highlighted the increasing activities of middlemen who often finance smallholder farmers, aggregate, hoard, and move farm produce across the border to neighboring countries, and suggested the need to address these challenges to moderate food prices.
The committee resolved to sustain collaboration with the fiscal authority to ensure that inflationary pressure is subdued and expressed optimism with the recent stop-gap measures by the Federal Government to bridge the food supply deficit.
The MPC observed the narrowing spread between the various foreign exchange segments of the market, an indication of price discovery and improved market efficiency, and urged the Bank to explore available avenues to improve inflows, especially through diaspora remittances.
The committee lauded the efforts of the Federal Government and private sector towards improving domestic refining capacity, which is expected to reduce foreign exchange currently being expended on the importation of refined petroleum products.
The Governor of the CBN, Olayemi Cardoso, mentioned the sustained resilience of the banking system, reflected in improvements of key financial soundness indicators (FSIs), and emphasized the continued need for close monitoring of the system.
He re-emphasized its commitment to stay on course with its tightening cycle in view of the urgent need to address inflationary pressures.
The next meeting of the Committee will be held on September 23-24, 2024.
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