March 26, (THEWILL) – In keeping with its inflation-targeting framework, the Central Bank of Nigeria (CBN), on Tuesday, raised the interest rate (also called monetary policy rate) by 200 basis points from 22.75 percent it put it last February, to 24.75 percent.
Experts had predicted further interest hike at the 2-day CBN Monetary Policy Committee (MPC) meeting of March 25 and 26, 2024, amid soaring inflation
Nigeria’s latest annual inflation rate jumped to 31.70 percent in February, from 29.90 percent a month earlier, primarily fueled by a continuous surge in food prices, according to the National Bureau of Statistics (NBS).
Briefing the press after the MPC meeting on Tuesday, the CBN governor, Olayemi Cardoso, disclosed that the rate-setting committee voted to adjust the asymmetric corridor around the MPR at +100 to -300 basis points.
He also said the committee voted to retain the Cash Reserve Ratio (CRR) at 45 per cent for commercial banks and adjust the CRR of merchant banks from 10 per cent to 14 per cent.
According to him, the committee also voted to retain the liquidity ratio at 30 per cent.
He said the committee’s considerations focused on the current inflationary pressures and the need to anchor inflation expectations as well as ensure sustained exchange rate stability.
“These considerations underscore the importance of the ECB and its commitment to the price stability mandate and the need to urgently bring inflation under control to ensure that the purchasing power of ordinary Nigerians is restored in the short to medium term.
“Members noted the continued rise in headline inflation driven largely by food prices, because of supply shortages, and high cost of Logistics and Distribution. The committee, therefore, was of the view that addressing food insecurity is key to containing current inflationary pressures.
“On this note, members commended the ongoing efforts of the federal government towards addressing food insecurity. Some of these measures include the provision of various palliative release of grains from the strategic reserves, distribution of seeds and fertilisers as well as farm implements for dry season farming.
“The committee therefore called for the full implementation of the federal government’s agricultural policies and programmes to improve food supply and further advised for broader fiscal consolidation, particularly on the improvements of tax collection and tax to GDP ratio,” he said.
The CBN boss said the committee will continue to monitor developments in the global and domestic economies to ensure that inflationary expectations are anchored to restore and sustain macroeconomic stability.
He announced that the next meeting of the MPC will be held on 20 and 21 May, apparently reverting to the regular by-monthly session it has been known for.
About the Author
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
