…The Committee members also voted to adjust the asymmetric corridor to +500bps/-100bps (Previously: +100bps/-300bps),
…retain CRR for Deposit Money Banks at 45.0%, and Merchant Banks at 14.0%
…as well as retain liquidity ratio at 30.0%.
TUE JULY 23 2024-theGBJournal| The Monetary Policy Committee (MPC) members voted Tuesday to raise the Central Bank’s interest rate 50bps to 26.75%, amid struggle to ensure price stability, reduce the negative real rate of return, manage inflation expectations, and stabilize the naira.
The Committee members also voted to adjust the asymmetric corridor to +500bps/-100bps (Previously: +100bps/-300bps), retain CRR for Deposit Money Banks at 45.0%, and Merchant Banks at 14.0% as well as retain liquidity ratio at 30.0%.
The rate hike means that consumers aren’t likely to see any near-term relief from the spiraling borrowing costs.
As expected, the MPC assessed the recent developments in the global and domestic economies since the last policy meeting, and the still elevated inflationary pressures indicated in the further uptick in the June inflation print (34.19% y/y).
Additionally, we point out the increased volatility in the naira primarily due to muted FPI inflows and frail FX interventions from the CBN, which the Committee members also assessed.
After the latest headline inflation reading, analysts had penciled in a 100 basis points to 27.25%. Investors were also preparing to price in this level, but the slowing stubborn consumer price index may have prompted the CBN’s MPC to alter expectation and opted for more conservative rate.
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