Governor, Central Bank of Nigeria (CBN)
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria(CBN), has raised the country’s baseline lending rate by 150 basis points from 24.75 per cent to 26.25 per cent.
This was contained in a communique from the 295th meeting of the MPC. signed by Governor of CBN, Yemi Cardoso on Tuesday and made avilable to African Business Travel News (ABTNEWS) by the apex bank.
This is the third consecutive tightening of the lending rate, known as the Monetary Policy Rate, (MPR) by the MPC under the governorship of Cardoso.
Other decisions taken at the 295th meeting held on May 20 and 21, 2024 include retention of the asymmetric corridor around the MPR to +100/-300 basis points, Cash Reserve Ratio of Deposit Money Banks at 45.00 per cent and Liquidity Ratio at 30.00 per cent
According to the communique, the key focus of the MPC at this meeting remained to achieve price stability by effectively using tools available to the monetary authority to rein in inflation.
The meeting observed that while year-on-year headline inflation in April 2024 rose moderately, the month-on-month measures of headline, food and core all declined significantly. This, the MPC noted followed a decline (month-on-month) of headline and food measures in March 2024 which suggested that the recent tight monetary policy stance of the Bank is beginning to yield the desired outcomes.
The MPC, however, noted that the inflationary pressure continues to be driven largely by food inflation.
The Committee thus reiterated several challenges confronting the effective moderation of food inflation to include: rising cost of transportation of farm produce; infrastructure-related constraints along the line of distribution network; security challenges in some food producing areas; and oil,
The MPC therefore urged that more be done to address the security of farming communities to guarantee improved food production in these areas. Members further observed the recent volatility in the foreign exchange market, attributing this to seasonal demand, a reflection of the interplay between demand and supply in a freely functioning market system. The Committee also noted the marginal increase in the external reserve balance between March and April 2024 and urged the Bank to sustain its focus on accretion to reserves.
Notwithstanding, the MPC commended the Apex Bank for the recent approval of licenses of fourteen (14) international Money Transfer operators (IMTOs). This iit believed would improve competition and lower the cost of transactions, thus attracting more remittances through formal channels.
Also the Committee noted with satisfaction that the banking system remains safe, sound, and stable, despite the headwinds confronting the economy. It commended the recent recapitalization initiative and urged the management to sustain its regulatory oversight to ensure the continued stability of the banking
system.
All twelve members attended the meeting. The next meeting of the Committee will hold on July 22 and 23, 2024.
