In a move aimed at curbing inflation and ensuring price stability, the Central Bank of Nigeria (CBN) increased its benchmark interest rate, the Monetary Policy Rate (MPR), by 150 basis points to 26.25 percent from 24.75 percent.
This marks the third rate hike in less than three months, with CBN Governor, Mr. Olayemi Cardoso, emphasizing that there are no quick fixes to the current economic challenges.
During a press briefing following the Monetary Policy Committee (MPC) meeting in Abuja, Cardoso highlighted the necessity of these measures in addressing the persistent inflationary pressures.
Despite the rate hike, the CBN opted to maintain the Cash Reserve Ratio (CRR) for deposit money banks at 45 percent and the Liquidity Ratio at 30 percent.
Cardoso expressed confidence in the effectiveness of the strategies implemented by the CBN to combat inflation and stabilize the foreign exchange market, anticipating positive outcomes in the near future.
He acknowledged the prolonged inflationary trend, particularly driven by food inflation, but noted signs of moderation in the overall inflation rate, attributing it to the ongoing efforts of the central bank.
The challenges identified by the MPC in tackling food inflation include rising transportation costs for farm produce, infrastructure limitations in distribution networks, security issues in key food-producing regions, and the impact of exchange rate fluctuations on domestic prices of imported food items.
The committee stressed the importance of enhancing security in farming communities to boost food production and recommended addressing the volatility in the foreign exchange market through a balanced approach to demand and supply dynamics.
Cardoso highlighted the growing investor confidence in Nigeria, emphasizing the CBN's initiatives to enhance market transparency, which has been positively received by foreign portfolio investors.
