The Governor of the Central Bank of Nigeria (CBN), Yemi Cardoso, announced that the Monetary Policy Committee (MPC) unanimously agreed to tighten the Monetary Policy Rate (MPR) during their 297th meeting in Abuja on Tuesday. Cardoso, who chairs the MPC, confirmed that 11 of the 12 members present supported the decision.
The MPC has raised the baseline interest rate for the fifth consecutive time, increasing it by 50 basis points from 26.75% to 27.25%. Additionally, the Cash Reserve Ratio (CRR) for Deposit Money Banks has been raised by 500 basis points to 50% from 45%, and the CRR for merchant banks increased by 200 basis points to 16% from 14%.
Cardoso noted that the MPC retained the asymmetric corridor around the MPR at +500/-100 basis points and kept the Liquidity Ratio at 30%. He mentioned a moderation in headline inflation for July and August, along with relative stability and convergence in exchange rates across various market segments, which he attributed to the apex bank’s stringent monetary policy. This stability is expected to enhance confidence, allowing economic agents to plan more effectively in the medium to long term.
However, he acknowledged that more efforts are needed to fulfill the CBN’s price stability mandate. Despite a downward trend in headline inflation, core inflation remains high, primarily due to rising energy prices.
