CBN increases MPR to 16.5 percent while maintaining other conditions

The Monetary Policy Rate (MPR) of the nation was raised by 100 basis points to 16.5 percent from 15.5 percent on Tuesday by the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN).
The MPC also agreed to hold all other factors constant, according to CBN Governor Godwin Emefiele, who made the announcement at the conclusion of the committee’s two-day meeting on Tuesday.

Thus, the MPR’s asymmetric corridor of +100/-700 basis points, 32.5 percent for the Cash Reserve Ratio (CRR), and 30 percent for the Liquidity Ratio were all maintained.

11 MPC members who were present at the meeting, according to Emefiele, unanimously voted in favor of rate increases.

According to him, two members voted to boost rates by 50 basis points, while two members voted to raise the MPR by 100 basis points.

According to Emefiele, the MPC considered that all of the economic causes for its policy position, including the Russian-Ukrainian conflict and supply chain disruption, were still prevailing.

“This meeting did not favor the loosening option. The committee also believed that easing the attitude of policy in response to rising inflation would cause inflation to grow more quickly.

“As for whether to hold, the MPC felt that doing so so close to the holiday season in December and the anticipated high spending during the general election in 2023 would jeopardize the benefits of past policy rate tightening.

He claimed that doing so “would drag the economy deeper into the inflation trap.”

He continued by saying that the MPC made the decision to keep tightening, albeit at a somewhat slower pace.

“At this meeting, the choice of holding or tightening policy rates was discussed.

He explained, “The option to loosen was not considered as this will severely damage the benefits of the three prior judgments.

At its last meeting in September, the MPC raised the MPR by 150 basis points, from 14% to 15.5%.

In July, it had previously raised the MPR by 100 basis points, from 13% to 14%. (NAN)