The Governor of the Central Bank of Nigeria, CBN, Yemi Cardoso, has said the decision by the Monetary Policy Committee, MPC, of the apex bank to further tighten the Monetary Policy Rate, MPR, was unanimous.

Mr Cardoso, who is also the Chairman of the MPC, said this on Tuesday in Abuja while presenting the communique from the 297th meeting of the committee.

He said that 11 of the 12-member committee present at the meeting approved the decision to further tighten the rate.

Mr Cardoso announced that the MPC decided to raise the baseline interest rate also known as the MPR for the fifth consecutive time, by 50 basis points from 26.75 per cent to 27.25 per cent.

According to him, the MPC also raised the Cash Reserve Ratio, CRR, of Deposit Money Banks by 500 basis points to 50 per cent from 45.00 per cent.

It raised the CRR of merchant banks by 200 basis points to 16 per cent from 14 per cent.

He said that the MPC retained the asymmetric corridor around the MPR at +500/-100 basis points, and also retained the Liquidity Ratio at 30.00 per cent.

“The Committee noted the moderation in headline inflation year-on-year in July and August.

“In addition, the MPC noted the relative stability and convergence in the exchange rate across the various market segments, resulting from the apex bank’s tight monetary policy stance.

This is expected to improve confidence, which will enable economic agents to plan in the medium to long term,” he said.

He said that the committee was, however, unanimous in recognising that a lot more was required to actualise the price stability mandate of the CBN.

“The MPC noted that even though headline inflation trended downwards due to a moderation in food inflation, core inflation has remained elevated, driven primarily by rising energy prices.

“The uptrend poses severe concerns to members, as it clearly indicates the persistence of inflationary pressures.

”Members thus reiterated the need to work in close collaboration with the fiscal authority to address the current upward pressure on energy prices,” he said.

He said that the committee was also concerned about the need to mop up excess liquidity, address foreign exchange demand, as well as growing fiscal deficit.

He, however ruled out the Ways and Means option in addressing the deficit.

“The MPC noted the continued growth in money supply, recognising the need to curtail excess liquidity in the system as well as address foreign exchange demand pressures.

“Members were also concerned about the growing level of fiscal deficit but acknowledged the commitment of the fiscal authority not to resort to monetary financing through Ways and Means.

”Furthermore, members observed a strong correlation between Federation Accounts Allocation Committee (FAAC) releases and liquidity levels in the banking system as well as its impact on the exchange rate.

“The Committee, therefore, agreed to increase monitoring of future releases with a view to addressing its effects on price developments,” Mr Cardoso said.

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