CBN holds MPR at 27.5% to steer economic stability

The monetary policy committee (MPC) of the Central Bank of Nigeria (CBN) has again retained the monetary policy rate (MPR), which benchmarks interest rates in the country, at 27.50 percent.

Olayemi Cardoso, CBN’s governor, announced the committee’s decision at a press conference on Tuesday after the panel’s 300th meeting in Abuja.

Speaking at the media briefing, Cardoso said the committee members unanimously decided to retain the policy to better understand near-term developments.

The committee retained the cash reserve ratio (CRR) at 50 percent, and liquidity ratio at 30 percent.

“MPC noted the relative improvements in some key macroeconomic indicators expected to support the overall moderation in crisis in the near to medium term,” Cardoso said.

“These include the progressive narrowing of the gap between the Nigerian foreign exchange market, bureau de change (BDC) windows, the positive balance of payments position and the easy price of PMS.

“The members also noted with satisfaction the progressive moderation in food inflation and, therefore, commended the government for implementing measures to increase food supply, as well as stepping up the fight against insecurity, especially in farming communities.

“The committee thus encouraged security agencies to sustain the momentum while the government provides necessary inputs to farmers to further boost food production.”

The CBN governor, however, said the committee acknowledged underlying inflationary pressures mainly driven by high electricity prices, persistent foreign exchange demand, pressure and other legacy structure factors.

“The MPC noted new policies introduced by the federal government to boost local production, reduce foreign currency demand pressures, and thus lessen the pass-through to domestic crisis,” he said.

“Given the relative stability observed in the foreign exchange market, members urged the bank to sustain the implementation of the ongoing reforms to further boost market confidence.”

Cardoso also called on the fiscal authority to strengthen efforts to enhance foreign exchange earnings, especially from oil and non-oil exports, adding that the sectors are “beginning to yield great returns”. (Thecable)