Amidst ongoing economic challenges in Nigeria, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has taken decisive steps to address inflationary pressures and stabilize the economy. In a recent announcement, the MPC has decided to increase the Monetary Policy Rate (MPR) by 50 basis points, raising it from 26.75% to 27.25%.
In addition to the MPR adjustment, the committee has also raised the Cash Reserve Ratio (CRR) by 50 basis points. This move requires Deposit Money Banks (DMBs) to hold a higher percentage of their deposits with the central bank, with the CRR increasing from 45% to 50%. Similarly, Merchant Banks will now have to maintain a CRR of 16%, up from the previous 14%.
The Monetary Policy Committee (MPC) voted to raise Monetary Policy Rate (MPR) by 50 basis points from 26.75% to 27.25%; raise Cash Reserve Ratio (CRR) by 50 basis points from 45% to 50% for Deposit Money Banks (DMBs) and from 14% to 16% for Merchant Banks. The committee retains the Liquidity Ratio (LR) at 30% and Asymmetric Corridor at +500/-100 basis points around the MPR.
While the MPR and CRR have been elevated, the Liquidity Ratio (LR) remains unchanged at 30%. The Asymmetric Corridor, which sets the range for the interest rates on the standing facilities, remains at +500/-100 basis points relative to the MPR.
These tightening measures reflect the CBN’s commitment to addressing economic challenges and ensuring price stability in Nigeria. By taking proactive steps to manage monetary policy, the CBN aims to support sustainable economic growth and mitigate the impact of inflation on the economy.
The decision by the MPC underscores the central bank’s efforts to navigate the current economic landscape and steer the country towards a path of recovery and stability.