For the umpteenth time, the monetary policy committee of the Central Bank of Nigeria on Tuesday extended its tightening stance by further raising monetary policy rate (MPR) by 25 basis points, from 27.25 percent to 27.50 percent.
Apart MPR, which determines the rate at which banks conducts their lending activities to individuals and businesses in the economy, the MPC unanimously resolved to retain the asymmetric corridor around the MPR at +500/-100 basis points; Cash Reserve Ratio of Deposit Money Banks at 50 percent and Merchant Banks at 16 percent, and Liquidity Ratio at 30 percent
These were the decisions by the MPC announced by the CBN governor. Olayemi Cardoso, at the end of its 155th meeting held in Abuja.
The meeting held amid escalating food and core inflationary trends in the economy, resolved to continue focusing on efforts to reverse rising prices.
Apart from proposals to the Federal Government on how to
improved security , especially in the North-East part of the
country, to boost food production, the Committee also expressed concern over the impact of rising energy prices, particularly petrol, on labour and other factors of production.
Noting the improvement in the external sector, as a result of the increase in reserves and enhanced remittance
and capital inflows, the committee said this suggests that key policy measures by both the monetary and fiscal authorities were yielding the desired results.
During the post-meeting briefing, the CBN governor reported that the country’s external reserves, which grew marginally from $40.06 bn at end-October 2024, to $40.88 bn as at November 21
2024 could finance 17 months of imports.
Urging the CBN to adopt measures to boost market liquidity, the committee expressed satisfaction for the continued resilience and stability of the banking system, despite significant headwinds.
Fielding reporters questions, Cardoso noted the uncertainties that overwhelmed the global economies, causing instability to currencies and prices, assuring that the CBN would continue to adopt policies that restore stability to allow for effective plannin.
On the value of the Naira, the CBN governor said this was being affected by the high appetite of Nigerians for foreign goods, pointing out that the time has come for us to look at the country’s economy and develop more interest in buying local goods and shunning importation.
“That is not too much to ask for, to help shore up the value of the Naira. As we continue to diversify our economy, we will continue to have import substitution and trade policies that encourage the use of our own products,to ensure the issue of relying on foreign goods becomes less an issue,” he said.
On efforts by the CBN to pull Nigeria out of the grey list of Financial Action Task Force (FATF), Cardoso said apart from a series of meetings with Nigerians recently in Washington on issues to help boost remittances to Nigeria, the apex bank has taken steps to restructure the International Money Transfer Organisations (IMTOs) to make it easier for their transactions to come through on a regular basis.
This steps, he noted, has enabled remittances from abroad to grow from about $250m to about $600m
To further boost the processes of opening an account in Nigeria and sending money back home Cardoso said a non-resident account programme is scheduled to kick off in December this year, to make opening of accounts and doing business in Nigeria relatively seamless.
To ensure Nigeria is removed from the FATF grey list, he said CBN was collaborating more with other agencies to ensure the country’s anti-money laundry processes and procedures work effectively, and sanctions were applied where needed.
“We will not stop to do that. We are also enhancing our regulatory frameworks and ensuring that we are going around to see that the relative players are operating the way they are meant to be.
“Of course, we are deepening international cooperations, which is very important, to ensure that we are out there understanding what the expectations are from FATF and the ancillary bodies, and making sure that we are well-endowed to meet their expectations. With that all in view, our expectation is that by the second quarter of 2025, we should exit FATF grey list,” the CBN governor said.
On steps taken by the CBN to check the reported cases of a shortage of cash in parts of the country, particularly during forthcoming Yuletide season, Cardoso one of the two committees set up was for cash shortages.
He said although some progress has been recorded in resoect of diaspora remittances, a lot has been going on with the issue of cash shortages
Apart from ensuring that all the deposit money banks get all the cash they require, the CBN governor said the Bank has been holding regular dialogue with its branches to ensure adequate supply of cash, in addition to spot checks and sanctions where necessary.
He said there were plans to introduce some adhoc measures, like cash buffers, during the Christmas season.