July 23 (Lagos) - The Monetary Policy Committee of the Central Bank of Nigeria unanimously agreed to raise its key benchmark lending rate also known as MPR to 26.75% from previously at 26.25% defying analyst expectations who expected a sharper increase to rein in the inflation monster.
Inflation is still way above the MPR at near 35% while food inflation is at 40% levels. Economist worry about the direction of this inflation monster that is not even showing signs of coming under control. The main culprit is the devaluation of the Naira which has happened multiple times over the past 9 years dropping from N 200 levels to N 1600 levels against the US Dollar.
CBN failed to check the inflation monster for 8 years and now it is having to raise interest rates aggressively to do the same.
MPR increased by 50bps from 26.25% to 26.75%.
Adjusted the Asymmetric corridor from +100/-300 basis points to +500/-100 basis points around the MPR.
Retain CRR of Deposit Money Banks and Merchant Banks at 45.00% and 14.00%, respectively.
Retain Liquidity ratio at 30.00%.
The overnight repo rate moved higher above a key rate in another worry for analysts who now expect the inter-bank rate to move higher.
reporting for easykobo.com on Tuesday, July 24 2024 from Lagos, Nigeria