The Central Bank of Nigeria (CBN) has raised the Monetary Policy Rate (MPR), which measures interest rate, from 18.5 percent to 18.75%.
Acting CBN Governor, Folashodun Shonubi, announced this on Tuesday after the bank’s Monetary Policy Committee (MPC) meeting in Abuja.
But, Senior Advocate of Nigeria, Ikeazor Akaraiwe posits that “utilizing pure monetary and fiscal economic instruments without balancing this with the understanding of economic history is the core reason WHY African economies stretching from Senegal, Ghana in the West to Kenya in the East and Egypt in North double down on same policies of ‘fighting inflation’, ‘cutting/removal of subsidies’ that actually pauperize themselves even further.”
This is the first decision of the monetary committee since President Bola Tinubu’s assumption of office on May 29, 2023.
It is also the first decision of the committee in about a decade without embattled Godwin Emefiele who was suspended as the governor of the apex bank on June 9, 2023.
Last week, Nigeria’s headline inflation rose to 22.79% in June from the 22.41% recorded in May 2023 amid soaring food prices and rising cost of transportation occasioned by the removal of subsidy on Premium Motor Spirit known as petrol.
This was according to the latest Consumer Price Index (CPI) report released by the National Bureau of Statistics (NBS). The CPI measures the rate of change in prices of goods and services.
Shonubi, who addressed pressmen at the CBN headquarters in Abuja on Tuesday, said “Hiking the interest rate has made a lot of difference in moderating the rate of inflation”.
The CBN MPC voted to hike MPR by 25 basis points to 18.75% from 18.5%. The committee narrowed the asymmetric corridor to +100/-300 from +100/-700 and retained the Cash Reserve Ratio (CRR) at 32.5%
He also said the volatility around foreign exchange rates would soon normalise.
Credits: Channels TV, additional reports by Law & Society Magazine
