Nigeria has again reviewed upward the monetary policy rate by 100 basis points to 17.5 per cent.
The Central Bank of Nigeria, CBN, Monetary Policy Committee gave consideration to this as a measure to tackle rising inflation rate.
The CBN Governor Godwin Emefiele, provided this explanation at a post monetary policy Committee press briefing and a communiqué issued at the end of the first MPC meeting in 2023, in Abuja.
Emefiele, who read the communiqué said that the previous increases had yielded results, with the slight drop in the inflation rate recorded in December 2022.
The Committee, however, held all other parameters constant.
While the Assymetric Corridor of +100/-700 basis points around the MPR was retained, the Liquidity Ratio of 30 per cent and the Cash Reserve Ratio (CRR) of 32.5 per cent were also retained. The MPR had witnessed four consecutive increases, from 11.5 per cent in early 2022 to 16.5 in November 2022.
According to Emefiele, the Committee deliberated on whether to hike rates further or hold on to examine the impact of the past increases. “The options considered were primarily to hold the rate or tighten it further to consolidate the previous gains. However, the MPC noted that loosening the rate would gravely undermine the gains of the last four increases, hence the hike in rate,” he said.