Inflation concern has once again forced the Monetary Policy Committee meeting chaired by Yemi Cardoso, Central Bank of Nigeria, (CBN) governor by 200 basis points per cent to 24.75 per cent from 22.75 per cent last month.
The CBN Governor, Olayemi Cardoso, disclosed this on Tuesday at the 294th Meeting of the MPC press briefing in Abuja.
According to him, the Cash Reserve Ratio (CRR) is now at 45%.
The Apex bank boss said the move was to ensure that the country’s rising inflation rate, which stood at 31.70 per cent in February, was moderated.
“Members noted the continued rise in headline inflation was driven largely by food prices because of supply shortages and high cost of logistics distribution,” Cardoso said.
According to him, addressing food insecurity is key to containing current inflationary pressures.
The governor said it was a tough decision to make but there was a consensus by the committee to progress with the tightening circle.
“Key drivers of inflation remain the strong exchange rate pass through to domestic prices, rising costs of transportation, high costs of energy and other production inputs, lingering insecurity and legacy infrastructure deficit,” he added.
President Bola Tinubu’s reforms, while painful for consumers, have led the currency to gain in recent days and improved investment flows. Foreign inflows rose to $2.3 billion in February, driven by renewed interest from foreign investors and a rise in overseas remittances. \
This figure in the first quarter of 2024 outperformed the $3.9 billion received for 2023. While foreign-investor portfolio trade on the Nigerian bourse increased by 18% in February 2024 from roughly half of that figure at the beginning of the year.
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Victor Ogiemwonyi, a retired Investment Banker and former Governing Council Member of the NSE ( Now NGX Group ) was of the opinion that CBN might likely hold rates because, they have to take cognizance of the slowing growth of the economy and to also allow the results of the new rate hikes on inflation to play out.
In a message sent to metrobusinessnews.com, the banker said, “If there is
any rate hike at all, it will be very small like 50 basis points, just to acknowledge that inflation is still very high.”
However, Cardoso acknowledged the inflationary pressures and the pass through effects of the exchange rate, but, with his other members on the committee, opted for 200 basis points hike.
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