The Central Bank of Nigeria (CBN) has increased its Monetary Policy Rate (MPR) by 50 basis points to 27.25%, which is the fifth consecutive rate hike this year.
This decision was made during the Monetary Policy Committee meeting held in Abuja. Olayemi Cardoso, the Governor of the CBN, disclosed that the decision was taken in unison by all members due to the need to still address inflationary concerns, despite moderating inflation.
The Committee resolved that the MPR be raised to 27.25 percent, so as to help in anchoring inflation expectations and boosting investor sentiments. Other measures include increasing the Cash Reserve Ratio (CRR) for commercial banks by 500 basis points to 50%, and for merchant banks by 200 basis points to 16%. The upper and lower limits of the Asymmetrical corridor of the MPR remain unchanged at +100/-300 basis points.
The primary objective of the rate increase is to cushion the economy from reeling into recession from the escalation of petrol prices and to safeguard price stability. The action taken by the CBN seeks alternative solutions to managing inflation without stifling economic activities.
