The CBN’s Monetary Policy Committee (MPC) has increased the benchmark interest rate by 150 basis points, from 24.75 percent to 26.25 percent, in response to rising food inflation.
Dr. Yemi Cardoso, the Governor of the Central Bank of Nigeria, revealed this during a two-day MPC marathon meeting in Abuja on Tuesday.
He said the committee voted to retain the Cash Reserve Ratio (CRR) at 45 percent for commercial banks and adjust the CRR of merchant banks from 10 percent to 14 per cent.
The committee also voted to retain the liquidity at 30 per cent.
According to him, the meeting’s key focus remains to achieve price stability by effectively using tools available to the monetary authority to rein in inflation.
He said: “The committee last reiterated several challenges confronting the effective moderation of food inflation, including rising costs of transportation of farm produce, infrastructure-related constraints along the line of distribution networks, security challenges in some food-producing areas, and exchange rate pass-through to domestic prices for imported food items.
“The MPC urged that more be done to address the security of farming communities to guarantee improved food production in these areas.”
Cardoso said the MPC’s primary goal at the meeting was to achieve price stability by effectively using tools available to the monetary authority to rein in inflation.
Citing the last inflation report, the CBN governor stated that the committee’s efforts to reduce inflation have had an effect.
“In terms of looking at the inflationary figure over the past year, inflation is indeed getting more and more of an issue. And, frankly, the need to moderate that by saying that any kind of inflation, in my view, is an issue,” he said.
“However, I think there is light at the end of the tunnel, and that is because as much as we see an increase in the inflationary figures, when you go down to the specifics in terms of food, core, and headline, you’ll see that it is moderating and decelerating in increment, and that’s the good news.
“For the first time since October, we have seen a relatively significant moderation in the rate of increase on the news components of inflation that I was talking about.
“I believe very strongly that the tools that the central bank is using are working.
” I have said it several times, and I will say it again: there is no magic wand. These are processes that require time and patience. They pass through, and the effect of the measures in advanced countries in developing countries does take time.”
Persecondnews recalls that Nigeria’s headline inflation rate continued to climb to 33.69% in April 2024, its highest since March 1996, up from 33.2% in the prior month.
This marks the 16th consecutive month of inflation acceleration, partly due to renewed weakness in the naira coupled with the removal of fuel subsidies.
Food inflation, which accounts for the bulk of Nigeria’s inflation basket, soared to 40.5% in April, compared to March’s reading of 40%.
Additional upward pressure came mostly from the prices of housing and utilities (28.8% vs. 27.6%) and transportation (25.4% vs. 25.5%), attributed to the recent increase in electricity tariffs and fuels.
The annual core inflation rate, which excludes farm produce and energy, jumped to a fresh record high of 26.8% in April.
On a monthly basis, consumer prices rose by 2.29% in April, easing from a 3.02% surge in the previous month.
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