Feb 27 (Lagos) - The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) decided to hike its Monetary Policy Rate (MPR) by 400 basis points to 22.75% at the conclusion of its 2 day meeting today.
CRR - 45%
Liquidity ratio - 30%
Asymmetric Corridor - +100 basis points -700 basis Points around MPR
Positives
Will rein in the inflation monster.
Support Naira against other foreign currencies
Affirm investments in Naira
Make Nigerian financial markets more attractive to foreign investors.
Negatives
Higher borrowing costs for businesses & individuals.
Lower spending
Could lead to recession in the short to mid-term
Easykobo analyst reaction
This sharp rise in MPR was expected after the CBN went out of its way to sensitize the public about the profiles of the members of the MPC over the past week.
This is another bitter pill for the businesses and individuals to swallow in the Country but it is a necessary one. The immediate past CBN regime should have made this decision 7-8 years ago when inflation was lower than 20% and they should never have allowed that inflation to become a monster that we are staring at today.
CBN may have to raise this rate further at its next meeting because that inflation is out of control and we do not want to turn into a Zimbabwe or a Venezuela.
The blame is squarely on the immediate past CBN Governor and his team that failed to address this issue for years and years. Unfortunately the current CBN Governor will end of getting blamed for this decision however those other MPC members who are now very well known to the public and perhaps share the burden of the blame.
reporting for easykobo.com on Tuesday, Feb 27 2024 from Lagos, Nigeria