For the first time in two years, the Central Bank of Nigeria (CBN) on Tuesday raised the Monetary Policy Rate (MPR) from 11.5 per cent to 13 per cent, citing aggressive inflationary trends in the country and across the globe.
CBN Governor, Mr. Godwin Emefiele, who spoke journalists at the end of the Monetary Policy Committee meeting in Abuja, said the MPC retained all other parameters with +100/-700 basis points around the asymmetric corridor; Cash Reserve Ratio at 27 per cent and Liquidity Ratio at 30 per cent.
Emefiele explained that global supply disruptions occasioned by Russia’s invasion of Ukraine and the resurgence of the COVID-19 in China, the hub of global manufacturing, had resulted in unprecedented food and energy prices which have triggered high levels of inflation globally.
He stated said that the CBN faced the dilemma of bringing down inflation rate and at the same time implementing policies that would push growth.
He said that the situation required taking decisions in two opposite directions and that as such tough decisions must be taken.
According to him, “This communique has spoken very extensively about the concerns about the global rise in inflation price levels.
“You all would have seen that the price of crude oil, quite unexpectedly, has been at above $100 per barrel , in fact Nigeria’s Bonny Light, as at yesterday was about $116 a barrel, and what this means is that yes, whereas crude prices have gone up per barrel but at the same time, the cost of refinery and ultimate price, or the product, or the pump price at the station will naturally have gone up.
“This is a global phenomenon and I was watching CNN a few days ago, and one of the analysts was talking about an incredible distortion of the financial markets in the United States.
“And I said yes, well, welcome to a situation where, where as inflation is rising to unprecedented levels in the US and other economies, growth is also coming down and if you must tackle inflation, prices, and at the same time you want growth, then you know that you are faced with some compelling dilemma as to what to do.
“If you like to see inflation come down, but at the same time you want growth to go up, to achieve this, you have to take decisions that are in opposite direction and that brings to bear as to what type of skills do you have, have you put in place to ensure that you’re able to manage these two in a way that you maintain a balance where you see a moderation in inflation, and at the same time you grow your economy”.
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