The Central Bank of Nigeria has increased the Monetary Policy Rate by 100 basis points to 14 per cent, a move it believes would promote stability in the midst of rising inflation.
The apex bank’s Monetary Policy Committee took the decision on Tuesday at the 286th meeting held in Abuja.
Inflation had defied the bank’s monetary tightening objectives as it rose to 18.6 per cent in June.
The Central Bank Governor Godwin Emefiele said that MPC members believe that inflation will moderate.
Fears of inflation are threatening the global economy with the United States among the worst hit. The US Fed is expected to raise rates to abate the growing prices.
Emefiele said the MPC members are cautious of emerging external shocks.
He said the broad outlook for both the local and domestic economy remains cloudy considering the economic headwinds.
He said available data showed that there is likelihood for a growth decline due to supply blockages on account of the Russia-Ukraine war and high energy prices.
The governor said members are cautious of broad money supply due to election spending in the country, insecurity and upsurge in price of energy.
Emefiele said there was a need for a balance in the pricing of petroleum products and curbing insecurity.
The MPC expressed concern on Nigeria’s debt sustainability as borrowing is on the increase.
He told journalists that members of the committee were unanimous in their decision not to tighten or loosen the rates.
The committee said the 13 per cent rate did not curb the rising inflation as not containing inflation would threaten growth and the purchasing power of the poor.
MPC Committee Decision
Increased the MPR to 14 per cent
Retain the Asymmetric Corridor of +100/-700 basis points around the MPR
Retain the CRR at 27.5 per cent
Retain the Liquidity Ratio at 30 per cent