The Central Bank of Nigeria (CBN) has once again tightened Monetary Policy Rate (MPR), increasing the interest rate by 50 basis points to 26.75 percent.
The move is aimed at curbing persistent inflation, particularly in food prices.
The apex bank also adjusted the asymmetric corridor to +500/-300 basis points while retaining the Cash Reserve Ratio (CRR) at 45 percent and the liquidity ratio at 30 percent.
Addressing journalists at the end of the July Monetary Policy Committee (MPC) meeting in Abuja on Tuesday, July 23, CBN governor, Olayemi Cardoso noted that the decision to raise the MPR comes amid concerns over the impact of food inflation on the overall price level.
Despite ongoing efforts to moderate aggregate demand through monetary policy, rising food and energy costs continue to exert upward pressure on prices.
The MPC attributed this to factors such as insecurity in food-producing areas, high transportation costs, and the activities of middlemen who hoard and export food products.
To address the food supply challenges, the CBN Governor expressed support for the federal government’s recent measures, including the 150-day duty-free import window for certain food commodities.
However, the bank emphasized the importance of a defined exit strategy especially from the fiscal authorities to prevent a reversal of gains in domestic food production.
Cardoso also noted positive developments in the foreign exchange market, with a narrowing spread between different segments and an increase in external reserves.
The apex bank urged continued efforts to improve foreign exchange inflows, particularly through diaspora remittances and increased domestic refining capacity.
The banking system’s resilience was highlighted by the improvement in key financial soundness indicators.
The CBN emphasized the need for continued monitoring of the system as the recapitalization exercise progresses.