From Uche Usim, Abuja
Eleven members of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), on Tuesday, unanimously raised the Monetary Policy Rate (MPR) by 150 basis points from 11.5 per cent to 13 per cent, in a strategic move to mop up excess liquidity in the economy, ahead of the anticipated heavy spending on the 2023 general election campaigns.
The CBN Governor, Mr Godwin Emefiele, who made the disclosure at the end of the 142nd MPC meeting revealed that this was the first time the bank has increased its MPR rate since September 2020 when it was 12.5 per cent.
The MPR is the benchmark lending rate through which the CBN lends to banks.
The apex bank’s MPC took the decision at its 142nd meeting held in Abuja.
Nigeria’s inflation had risen to 16.82 per cent in April thereby complicating the central bank’s effort to manage the growing prices.
Although Nigeria’s economy is on a growth trajectory, the growth recorded is still fragile according to analysts.
On reports that Nigeria has been delisted from JP Morgan’s bond index, Emefiele vehemently debunked it, clarifying that Nigeria was merely reclassified from overweight to market rate.
The CBN Governor said; “the report is not true. We’re still there. Nigeria is not delisted. We were reclassified from overweight to market rate. It is not any failure of CBN.
“Ordinarily, an increase in crude oil should naturally lead to accretion to reserves and since it did not happen here, we were reclassified,” he said.
Emefiele noted that the Committee was confronted with declining global growth, which in itself stems from the aftermath of the ongoing war in Ukraine and the backlash on sanctions slammed on Russia by the United States and other nations.
He added that the global growth decline also sprang from sustained global supply chain disruptions and China’s continued battle against the COVID-19 pandemic. Given the rise in downside risks to growth.
In the first quarter, the National Bureau of Statistics said GDP growth was at 3.11 per cent.
Global inflationary pressure has influenced policy tightening as the International Monetary Fund also called on central banks for higher interest rates.