The Central Bank of Nigeria (CBN) has decided to keep the Monetary Policy Rates (MPR) at 27.5 per cent. The announcement was made by the Central Bank Governor, Olayemi Cardoso, during a press briefing in Abuja following the 300th meeting of the Monetary Policy Committee (MPC) of the apex Bank. Cardoso mentioned that all 12 members of the Committee were present and that the decision to maintain rates at 27.5 per cent was unanimous. Additionally, the cash reserve ratio for Deposit Money Banks remains at 50 per cent and 16 per cent for merchant banks. The Liquidity Ratio of banks was also kept at 30 per cent.
Reasons for the decision
Cardoso stated that the Committee’s decision was based on the moderation of food inflation and the progress made in combating insecurity, particularly in farming communities. The efforts to address these issues have played a significant role in shaping the decision to retain the Monetary Policy Rates. The Central Bank’s focus on stabilizing the economy and ensuring financial security has been evident in this decision, reflecting the ongoing challenges faced by the country.
Impact on the economy
Maintaining the Monetary Policy Rates at 27.5 per cent has implications for various sectors of the economy. The decision will influence borrowing costs, investment decisions, and overall economic activity. The stability in rates provides a sense of predictability for businesses and investors, allowing them to plan and strategize accordingly. While some may question the high rates, it is essential to consider the broader economic context and the measures being taken to address underlying issues. Overall, the decision reflects the Central Bank’s commitment to steering the economy in the right direction amidst ongoing challenges.
