The Central Bank of Nigeria (CBN) has increased its Monetary Policy Rate (MPR) to 27.25%, marking another hike in its efforts to address rising inflationary pressures.
The decision was made during the Monetary Policy Committee (MPC) meeting held on Tuesday, chaired by the new CBN Governor, Yemi Cardoso.
Governor Cardoso explained that the rate adjustment is part of a broader strategy to improve economic confidence and enable long-term planning for businesses and investors.
“The committee was unanimous in recognising that a lot more is required to actualise the bank’s price stability mandate,” he said during the announcement.
Despite a slight moderation in food inflation, core inflation has remained elevated, primarily due to rising energy costs. Cardoso noted that this persistent inflation continues to be a major concern for the committee.
“The uptrend poses severe concerns to members as it clearly indicates the persistence of inflationary pressures,” he stated.
To address this, Cardoso emphasized the importance of collaborating with fiscal authorities to tackle the challenges posed by rising energy prices, while also acknowledging the need to control the excess liquidity in the system and manage foreign exchange demand pressures.
The MPC also voiced concerns over Nigeria’s growing fiscal deficits, but Cardoso reassured the public that the federal government has pledged not to rely on ways and means financing through the CBN, which could further aggravate inflation.
“Members were concerned about the growing level of fiscal deficit but acknowledged the commitment of the fiscal authority not to resort to monetary financing through ways and means,” he added.
Cardoso lauded the government for its efforts to stabilize food prices and expressed optimism that the start of refined petroleum product lifting from Dangote Petroleum Refinery would help reduce transportation costs. This, in turn, could ease food price pressures in the near future.
“The lifting of refined petroleum products from Dangote Petroleum Refinery will moderate transportation costs and significantly support the easing of food price pressures in the short to medium term,” he stated.
The latest MPR hike follows the CBN’s previous increase in July 2024, when the rate was raised by 800 basis points to 26.75%, up from 13% in May 2022. The continuous rise in MPR reflects the CBN’s aggressive stance in battling inflationary pressures and stabilizing the economy.
