CBN pegs MPR at 27.5%, targets inflation drops

The Central Bank of Nigeria (CBN) has maintained its monetary policy rates, just as it reiterated  its commitment to orthodox economic strategies aimed at deepening stability.

The Monetary Policy Committee (MPC) of the apex bank voted to hold the Monetary Policy Rate (MPR) at 27.5 per cent, following a 25-basis-point increase from 27.25 per cent.

The CBN Governor, Olayemi Cardoso, disclosed this in Abuja on Thursday, at a post-MPC press briefing.

The Cash Reserve Ratio (CRR) for Deposit Money Banks was maintained at 50 per cent, while Merchant Banks will continue to operate with a CRR of 16 per cent.

Commenting on this development, he said: “At this meeting, the Monetary Policy Committee noted with satisfaction recent macroeconomic developments which are expected to positively impact price dynamics in the near to medium term. These include the stability in the foreign exchange market with the resultant appreciation of the exchange rate and the gradual moderation in the price of PMS.  However, the committee expressed concerns over persistent inflationary pressures driven mainly by food prices.”

Cardoso reiterated the bank’s commitment to data-driven decision-making to guide its policy decisions, noting that its deployment of orthodox monetary policies have been effective and that inflation has been on a gradual decline.

The CBN boss also affirmed the Bank’s commitment to reducing inflation from double digits to single digits in the medium term, and assured Nigerians it would continue to implement vigilant measures to maintain economic stability.

Responding to concerns about how the CBN balances inflation control with economic growth, he acknowledged the trade-offs involved but assured stakeholders that the policies in place are yielding positive results.

According to him, there has been a consistent improvement in Nigeria’s foreign exchange reserves, with increased investor confidence, and a more competitive Naira.

He maintained that achieving financial market stability remains a top priority, as stability fosters investment and economic expansion and expressed optimism that the country’s current monetary policies will continue to attract international investors and drive sustainable growth.

Commenting on the impact of the recently launched Nigeria Foreign Exchange Code, Cardoso highlighted that it is part of a broader strategy to ensure transparency, accessibility, and efficiency in the forex market. He pointed out that the elimination of multiple exchange rate windows has helped stabilise the Naira and reduce the disparity between official and parallel market rates to less than 1 per cent.

The FX Code, he said, brings together key stakeholders, including banks and financial institutions, to adhere to international standards of ethical foreign exchange trading.

He, therefore expressed confidence that the reforms would strengthen investor confidence and promote sustainable market stability.

Commenting on the recent changes to Automated Teller Machines (ATMs) withdrawal charges, Cardoso stressed that the new policy is intended to enhance banking efficiency rather than create barriers for rural dwellers.

He emphasized that the policy aims to incentivize banks to ensure seamless access to cash through ATMs, particularly in light of past currency shortages.

The governor reassured the public that withdrawing cash from one’s own bank remains free of charge, while interbank ATM withdrawals will incur minimal fees.

The apex bank head said that the CBN believes this measure will encourage banks to expand ATM networks and ultimately reduce reliance on informal cash transaction channels.

“We believe that with this new measure it will encourage a greater proliferation of ATMs and will make the access to money more seamless and indeed will discourage those who are taking advantage of a gap and are charging exorbitant prices to disburse money to people. It will literally shut that particular area out of business over a period of time,” he said.

Cardoso harped on the need for close coordination between monetary and fiscal authorities to sustain economic progress.

He revealed that the recent monetary policy forum brought together key stakeholders, including the Minister of Finance, the Minister of Budget and Planning, and the leadership of the Nigerian Governors’ Forum, to align strategies for managing inflation and boosting economic stability.

Accordingly, Cardoso urged stakeholders to remain patient and supportive as the bank works towards achieving its long-term economic goals, adding that the positive trajectory of Nigeria’s economic indicators reflects the effectiveness of ongoing reforms.