Unconvinced by the relative decline in inflation in July and August, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), yesterday resolved to raise the Monetary Policy Rate (MPR), the benchmark interest rate by 50 basis points to 27.25 percent from 26.75 percent in response to the continued inflationary conditions in the economy.
The apex bank retained the asymmetric corridor around the MPR at +500/-100 basis points, and also adjusted other monetary policy tools, increasing the Cash Reserve Ratio (CRR) of deposit money banks (DMBs) by 500 basis points to 50 percent from 45 percent and that of Merchant Banks (MBs) by 200 basis points to 16 percent from 14 percent.
The MPC retained the Liquidity Ratio (LR) at 30 per cent. This was the fifth consecutive hike in interest rate, having been raised by 8.5 percent under the current leadership of the apex bank.
The outcome of the MPC meeting beat analysts’ expectations that the committee would at least hold policy rates at current levels in response to the economic hardship faced by Nigerians.
