Post Monetary Policy Committee Meeting February 2024 - MPC Takes a More Aggressive Stance Against Inflation
The first (1st) Monetary Policy Committee (MPC) meeting chaired by the new Central Bank of Nigeria (CBN) Governor, Dr. Yemi Cardoso, was held on the 26th and 27th of February 2024. At the meeting, monetary policy tools were aggressively tightened to rein in inflation and curb excess money supply. The Committee after several considerations came to the following decisions:
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Hike the Monetary Policy Rate (MPR) by 400bps to 22.75% from 18.75%.
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Adjust the asymmetric corridor to +100/-700 basis points from +100/-300 basis points around the MPR
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Raise the Cash Reserve Ratio (CRR) to 45% from 32.50%
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Retain the Liquidity Ratio at 30.00%
Given the CBN’s commitment to curbing demand-side issues fueling inflationary pressures, we might see further hike in interest rate at the next MPC meeting holding on the 25th and 26th of March 2024. The Committee, in a bid to sustain foreign investor confidence, might resort to a mild increase in interest rate. Therefore, barring any respite in inflation figures, we expect a 50-100bps hike at the next MPC meeting.
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