The Central Bank of Nigeria has increased the Monetary Policy Rate by 50 basis points to 27.65 per cent in another move to contain inflation.
The apex bank made the decision on Tuesday after its 296th Monetary Policy Committee meeting.
In the last meeting held in May, the CBN raised the MPR by 150 basis points to 26.25 per cent from 24.75 per cent which it was in the previous months.
Before the latest hike, the central bank had increased benchmark interest rates seven times from 17.5 per cent in January 2023 to 26.25 per cent.
Despite the MPR raise, the country’s inflation has failed to moderate as the National Bureau of Statistics measured inflation at 34.19 per cent in June.
Food inflation rose to an all-time-high of 40.8 per cent in June.
Revealing the decision, the CBN Governor, Olayemi Cardoso said 11 members attended the meeting and they concluded to raise the “MPR by 50 basis points to 27.65 per cent from 26.25 per cent.”
“Adjust the asymmetric corridor around the MPR from plus 100 to minus 300, to plus 500 to minus 100 basic these points. Retain the cash reserve ratio of deposit money banks at 45 percent and merchant banks at 14 percent.
“Retain the liquidity ratio at 30 percent.”
He said the considerations were backed by rising prices on households and businesses and expressed its resolve to take necessary measures to bring inflation.
Cardoso said the committee, “Re-emphasized its commitment to the bank’s price stability mandate and remained optimistic that despite the June 2024 uptick in headline inflation, prices are expected to moderate in the near term.
“It was observed that while monetary policy has been moderating aggregate demand, rising food and energy costs continue to exert upward pressure on price development. The prevailing insecurities in food producing areas and high cost potential of farm produce are also contributing to this trend.”
He accused middlemen men who finance farmers of contributing to Nigeria’s food inflation.
He said, “The increasing activities of middlemen, who often finance smallholder farmers, obligate, hoard and move farm produce across the border to neighbouring countries.
“The committee suggested they need to put in check such activities in order to address the food supply deficit in the Nigerian market to moderate food prices. The MPC therefore resolved to sustain collaboration with the fiscal authority to ensure that inflationary pressure is subdued.”