The Central Bank of Nigeria (CBN) has raised the monetary policy rate (MPR), which measures interest rate, from 16.5 per cent to 17.5 per cent in order to rein in inflation “aggressively.”
The announcement was made by the governor of the CBN, Godwin Emefiele, after the committee’s meeting at the CBN headquarters in Abuja.
In December, Nigeria’s inflation rate fell slightly from 21.47 per cent to 21.34 per cent.
However, Emefiele said the Monetary Policy Committee (MPC) believes that the economy remains confronted with the risk of high inflation, which could have adverse consequences on the general standard of living.
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He explained that loosening the rate would negate the objective of damping pent-up aggregate demand which fuelled inflation.
“One member voted to increase the MPR by 150 basis points, four members by 50 basis points and seven members by 100 basis points. In summary, MPC voted to raise MPR to 17.5 per cent,” the CBN governor said.
According to the CBN governor, the committee also voted to retain the asymmetric corridor at +100 and -700 basis points around the MPR, as well as to retain the cash reserve ration (CRR) at 32.5 per cent and keep the liquidity ratio at 30 per cent.
Emefiele also insisted that the January 31 deadline for the phasing out of old naira notes remains sacrosanct and that the time given for the deposit of the old notes was enough for Nigerians to go to commercial banks and get new notes.