Economy policy overhaul: Again, CBN hikes MPR by 200bps to 24.75% amid inflationary pressures
In an unwavering move to address mounting inflationary pressures and stabilise exchange rates, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) announced a significant hike in the benchmark interest rate.
This decision, unveiled in a Tuesday communique by CBN Governor Yemi Cardoso following the second MPC meeting of his tenure in Abuja, marks a notable increase of 200 basis points, setting the new interest rate at 24.75 percent.
However, this adjustment represents the second rate hike by the current committee, following a previous increment from 22.75 percent just a month ago.
Despite holding the Cash Reserve Ratio (CRR) of deposit money banks steady at 45 percent, the MPC opted to adjust the CRR of merchant banks, raising it from 10 percent to 14 percent. Additionally, the committee maintained the liquidity ratio at 30 percent.
“The considerations of the committee at this meeting focused on the current inflationary pressures and the need to anchor inflation expectations as well as ensure sustained exchange stability,” remarked CBN Governor, Yemi Cardoso.
“The considerations of the committee at this meeting focused on the current inflationary pressures and the need to anchor inflation expectations as well as ensure sustained exchange stability,” the CBN chief said.
He said the moves are part of efforts to combat the country’s rising inflationary rate which was pegged at 31.70 percent in February.
Cardoso noted that MPC members believe the headline inflation in the country is triggered mostly by a hike in the cost of food.
“The committee therefore was of the view that addressing food insecurity is key to containing the current inflationary pressures,” he said while commending the Federal Government’s efforts at curbing food insecurity including the distribution of palliatives.
The MPC decision came amid the Nigerian authorities’ clampdown on cryptocurrency platform Binance.
In recent developments surrounding Nigeria’s cryptocurrency landscape, several executives from the cryptocurrency platform Binance were detained, with one individual managing to escape custody.
This incident occurred amidst the Nigerian authorities’ clampdown on the crypto platform, shedding light on the complexities of regulating digital assets in the country.
While addressing the ongoing situation, Cardoso emphasised the collaborative efforts between the CBN and various government agencies, underscoring the importance of inter-agency coordination in regulatory endeavors.
The CBN Governor highlighted past collaborations with law enforcement agencies, including the Economic and Financial Crimes Commission (EFCC), the Securities and Exchange Commission (SEC), and other regulatory bodies, resulting in promising outcomes.
Regarding the regulation of cryptocurrencies, the CBN Governor clarified that the responsibility falls under the purview of the Security and Exchange Commission (SEC), emphasising that it is not within the CBN’s mandate.
Despite this distinction, the CBN remains actively engaged in information-sharing initiatives such as the National Security Agency (NSA) to address emerging challenges in the cryptocurrency space.
While acknowledging the ongoing efforts and progress made in regulatory collaborations, the CBN Governor emphasised that regulating cryptocurrency remains a work in progress, reflecting the evolving nature of the digital asset landscape.
“We consider ourselves as having the wherewithal to collaborate with other agencies of government and that is a very important function for us. About a month ago, we actually did have collaboration with law enforcement agencies, EFCC, the SEC, and other regulatory bodies as well, and what came out of that, is a work in progress, but very positive as far as I can say,” he said.
“The NSA, we’ve been sharing information together. However, in this particular case, the responsibility for regulating cryptocurrency is not our role, it isn’t ours; it is strictly that of the Security and Exchange Commission, not our responsibility.”
