Date: Tuesday, 26 November 2024
Ref: CBN/MPC/COM/155/298
Attention: News Editors/Gentlemen of the Press

MONETARY POLICY RATE RAISED BY 25 BASIS POINTS TO 27.50 PER CENT FROM
27.25 PER CENT

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN)
held its 298th meeting on the 25th and 26th of November 2024 to review recent
economic and financial developments as well as assess the risks to the
outlook. All twelve members of the Committee were in attendance.

Decisions of the MPC
The Committee was unanimous in its decision to further tighten policy and
thus decided as follows:
1. Raise the MPR by 25 basis points to 27.50 per cent from 27.25 per
cent.
2. Retain the asymmetric corridor around the MPR at +500/-100 basis
points.
3. Retain the Cash Reserve Ratio of Deposit Money Banks at 50.00 per
cent and Merchant Banks at 16 per cent.
4. Retain the Liquidity Ratio at 30.00 per cent

Considerations
This meeting was held on the backdrop of renewed inflationary pressures, as
the headline, food and core measures rose year-on-year in October 2024.
The Committee was particularly concerned that all three measures also
inched up on a month-on-month basis, suggesting the persistence of price
pressures, with attendant adverse impacts on income and welfare of citizens.
Members, therefore, agreed unanimously to remain focused in addressing
price developments.
While food prices remain a key contributor to the uptick, Members
commended the efforts of the Federal Government for the improved
security, especially in the North-East of the country, which would likely
improve food production. The Committee also noted the role of rising energy
prices on the general price level due to its impact on factors of production.
The recent increase in the price of Premium Motor Spirit (PMS) has also
impacted the cost of production and distribution of food items and
manufactured
goods. The
Committee
was
optimistic
that
the
full
deregulation of the downstream sub-sector of the petroleum industry would
eliminate scarcity and stabilise price levels in the short to medium term.
Members thus, reiterated the need to strongly forge ahead with the
deepening collaboration between the monetary and fiscal authorities to
ensure the achievement of our synchronized objectives of price stability and
sustainable growth.
The Committee noted the improvement in the external sector, reflected by
the increase in the current account surplus, enhanced remittance and
capital inflows which have impacted the external reserves positively. This,
therefore, suggests that key policy measures by both the monetary and fiscal
authorities are yielding the desired outcomes. Members, however, expressed
concern over persisting exchange rate pressure, reflecting continued high
demand in the market. Consequently, the Committee urged the Bank to
explore measures to boost market liquidity.
Members noted with satisfaction the continued resilience and stability of the
banking system despite significant exogenous and endogenous headwinds.
Key financial soundness indicators such as the Capital Adequacy Ratio
(CAR), Non-Performing Loan ratio (NPL), Liquidity Ratio (LR), amongst others,
remain strong. The MPC, however, called on the Bank to maintain its close
surveillance on the banking system to sustain compliance with regulatory
thresholds and continued health of the industry.

The MPC acknowledged the efforts of the Bank in deepening financial
inclusion, towards improving the transmission mechanism of monetary policy
to enhance policy effectiveness.

From the foregoing, Members thus focused on the optimal policy choice to
address the uptrend in price development, stabilize the exchange rate and
anchor inflation expectations appropriately.

Key Developments in the Domestic and Global Economies
Data from the National Bureau of Statistics showed that headline inflation
(year-on-year) rose to 33.88 per cent in October 2024, from 32.70 per cent in
September 2024. On a month-on-month basis, it also rose to 2.64 per cent in
October 2024, from 2.52 per cent in the previous month, with both the food
and core components contributing to the continued rise in headline inflation.
Food inflation rose further to 39.16 per cent in October 2024, from 37.77 per
cent in September, while core inflation also rose to 28.37 per cent in October
2024, from 27.43 per cent in September.
The MPC, however, noted the moderation in the prices of farm produce and
commended the efforts of the Federal Government in driving increased
productivity in the agricultural sector.
The recovery of output growth was sustained, with Real GDP (year-on-year)
growing by 3.46 per cent in the third quarter of 2024 compared with 3.19 and
2.54 per cent in the preceding and corresponding periods, respectively. The
growth was driven by both the oil and non-oil sectors, with a notable
contribution from the Services sector. The non-oil sector grew by 3.37 per cent
in the third quarter compared with 2.80 per cent in the second quarter, while
the oil sector grew by 5.17 per cent (year-on-year), compared with 10.15 per
cent in the preceding quarter.
The external reserves rose marginally to US$40.88 billion as at 21st November
2024 from US$40.06 billion at end-October 2024, available to finance 17
months of imports.
At the global level, the IMF projects growth at 3.2 per cent for 2024 and 2025
from 3.3 per cent in 2023. Risks to this outlook, however, include ongoing
geopolitical tensions such as the lingering war between Russia and Ukraine as
well as the crisis in the Middle East. The deceleration in global inflation is
expected to continue into 2025 and move towards the long-run objectives of
key central banks in the advanced economies, albeit at a slow pace. This,
however, faces a growing risk of reversal as talks of trade tariffs heighten,
following the outcome of the November 2024 United States elections.

In view of the above developments and identified risks, Members reiterated
their commitment to price stability as the bedrock of a thriving Nigerian
economy.
The next meeting of the Committee is scheduled to hold on the 27th and 28th
of January 2025.
Thank you.
Olayemi Cardoso
Governor,
Central Bank of Nigeria
26th November 2024

PERSONAL STATEMENTS BY
THE MONETARY POLICY COMMITTEE MEMBERS
MPC MEETING NOVEMBER 25 – 26, 2024

1. AKU PAULINE ODINKEMELU
I voted to raise the Monetary Policy Rate (MPR) by 25 basis points to 27.50 per
cent, from 27.25 per cent, retain the asymmetric corridor around the MPR at
+500/-100 basis points, retain the Cash Reserve Requirement of Deposit
Money Banks at 50.00 per cent and Merchant Banks at 16 per cent, and the
Liquidity Ratio at 30.00 per cent. My decision was influenced by the following
developments:
Global Economic Developments:
There has not been any significant change in the global economy since the
September Meeting. The global economy remains burdened by uncertainty,
even as the IMF projects growth to stabilize at 3.2 per cent in 2024 and 3.3 per
cent in 2025 and 2026. Persistent geopolitical tensions, including the RussiaUkraine conflict, and the Middle East conflict continue to weigh heavily on
global economic prospects. The Advanced economies are expected to
grow by 1.9 per cent in 2024 and moderate slightly to 1.8 per cent in 2025,
while the Emerging Markets and Developing Economies (EMDEs) are
projected to achieve growth rates of 4.2 per cent in 2024 and 2025. SubSaharan Africa’s growth outlook has been revised upward to 3.6 and 4.2 per
cent.
Global inflation is projected to decelerate in 2024, moving closer to the longterm targets set by central banks in the advanced economies. The IMF
forecasts a decline in global inflation from 6.7 per cent in 2023 to 5.8 per cent
in 2024 and 4.3 per cent in 2025. This trend is attributed to falling energy
prices, a slowdown in wage growth, and tight financial conditions in the
advanced economies. Inflation is expected to continue its downward
trajectory in 2024 in the advanced economies. This deceleration is supported
by relatively high but gradually moderating interest rates as central banks
move towards monetary easing. Inflation is projected to decline by 2.0
percentage points, from 4.6 per cent in 2023 to 2.6 per cent in 2024, and
moderate further to 2.0 per cent in 2025. Inflation in the EMDEs is projected to
remain elevated due to persistent challenges such as exchange rate
pressures, inadequate transport infrastructure, and energy shortages, which
continue to pose upside risks to inflation. Inflation is expected to ease slightly
from 8.1 per cent in 2023 to 7.9 per cent in 2024 and further to 5.9 per cent in
2025. In my September statement, I emphasized that these structural factors

are predominantly non-monetary. However, it remains imperative for the
Bank to effectively anchor inflation expectations to ensure price stability amid
persistent inflationary pressures. I therefore, supported a further, albeit
gradual, rate hike to achieve this objective.
Domestic Economic Developments and Outlook
The growth data for the domestic economy remains unchanged from
September 2024 due to delays in data computation and publication. Yearon-year real GDP increased by 3.19 per cent in Q2 2024, up from 2.98 per
cent in Q1 2024, driven primarily by expansion in the oil sector. However,
muted growth in the non-oil sector, subdued consumer demand, exchange
rate depreciation, elevated interest rates, and rising prices continued to
constrain output growth. While growth is positive, addressing the downside
risks to growth is critical for stimulating and sustaining the growth trajectory
Year-on-Year headline inflation increased to 33.88 per cent in October 2024,
from 32.70 per cent in September 2024. This represents a resurgence of
inflationary pressures after two consecutive months of decline. Exchange rate
depreciation and high energy costs may have accounted for the
resurgence. This uptick in inflation influenced my decision to vote for a further
but gradual hike.
Other factors that influenced my decision are as follows:
First, is the outlook to domestic inflation, which is projected to increase
gradually due to perennial flooding in some food-producing states and high
cost of Premium Motor Spirit (PMS). Second, is the year-to-date growth in
broad money resulting from the depreciation in the exchange rate through
2024. Given the increase in money supply growth, credit has also continued
to grow, thus keeping aggregate demand relatively strong and putting
upward pressure on inflation. As an inflation focused central bank, further
tightening of monetary policy is essential to curtail credit growth and
moderate aggregate demand.

2. ALOYSIUS UCHE ORDU
Developments in the Global Economy
The November 2024 MPC took place against the backdrop of the re-election
of Donald Trump as US President – an outcome that is already impacting the
global economy. A month earlier, during the annual meetings of the IMF and
the World Bank, policymakers in the US and other advanced economies held
the view that the battle against inflation was largely won. The IMF thus raised
its forecast for US economic growth to 2.8 per cent in 2024 and 2.2 per cent in
2025. In the euro area, the IMF projected growth below 1.0 per cent in 2024,
while Japan will barely grow at all. Overall, the global economy was
expected to expand by 3.2 per cent in 2024 which is below the 20-year
average of 3.8 per cent. The Fund also projected that global inflation would
fall to 3.5 per cent by the end of 2025, quite a drop from the peak of 9.4 per
cent in the fall of 2022.
This generally upbeat outlook will need to be revisited as Trump’s economic
agenda (deficit-financed corporate tax cuts, global tariff increases, and
mass deportations) is likely to be inflationary. These policies would most
certainly lead to a more restrictive Fed stance in the future.
On November 7, the Fed cut interest rates by 0.25 percentage point to a
target range of 4.5 to 4.75 per cent; this followed the 50 basis points cut
earlier in September, the first reduction since 2020. However, in sharp
contrast to the September meeting where the Fed stated that “the direction
of travel is clear”, the absence of forward guidance was particularly
noteworthy in the post-November meeting statement by the Fed chair – a
reflection of the uncertain outlook in the period ahead. With Trump’s reelection, the pace of interest rate cuts may be reduced, with rates likely to
stay higher for longer in 2025.
Already, bond prices have fallen and the yields on US Treasury notes have
risen on the expectation of larger fiscal deficits. That the dollar strengthens in
anticipation of a worsening fiscal position reflects the US’s dominant position
in the global economy.
Though the uncertainty relating to the US election is now over, the policy
uncertainty has only just begun with increased focus on tariffs, trade wars,
taxes and trillion-dollar deficits. Executing such protectionist US policies will be
far much more devastating for the rest of the world. As US interest rates rise
relative to those in the rest of the world, an appreciating dollar will weaken
global economic outlook and lead to reductions in overall trade volumes.

For countries with dollar-denominated debt, a rising dollar will further
aggravate their debt burdens. The combination of higher rates and stronger
dollar will amount to a global tightening in financial conditions that may
prompt other central banks into more rate cuts that further strengthens the
dollar. Already, the euro has depreciated, and some market participants
anticipate euro-dollar parity later in 2025. The ECB is thus likely to cut interest
rates much faster than the Fed, especially as the Eurozone economic
conditions are weaker than the US. For China, a Trump tariff will lead to
substantial depreciation of the yuan, and this will drag down other emerging
markets currencies. Commodities have a long history of trading inversely with
the dollar which will adversely impact commodity producers, especially those
in Africa.
Developments in Africa
According to the IMF’s Regional Economic Outlook, economic growth in subSaharan Africa has continued to diverge with incomes in resource-intensive
countries, such as Angola and Nigeria, stagnating in contrast to non-resource
rich countries such as Ethiopia and Senegal. The performance gap
emphasizes the need for more effective fiscal management, improvements
in the business environment, economic diversification, and adopting
accountable measures to manage natural resource revenues well. As
indicated above, the unfolding developments in the global economy
suggest a likely worsening in the terms of trade and poor growth prospects for
commodity producers.
For South Africa, the IMF forecasts economic growth of 1.1 per cent in 2024
and 1.8 per cent next year. This is lower than the 3.0 per cent growth target
of the Government of National Unity. However, with a confluence of positive
factors (inflation slowed to 2.8 per cent in October which is below target; and
improved investor confidence), the Reserve Bank cut interest rate by 25 basis
points to 7.75 per cent in November 2024.
For Nigeria, CBN Staff statistical brief show that volatile items such as food
and energy continued to drive price pressures in October 2024. Food
inflation increased to 39.16 per cent; core inflation to 28.37 per cent; and
headline inflation to 33.88 during the month. Disaggregated by States, 20
States recorded increased food inflation versus 17 States where food prices
declined during the period. Supply chain issues, poor infrastructure and
insecurity continued to play key roles in exacerbating inflationary pressures
and these factors necessitate expeditious actions by the fiscal authorities.

Staff analysis of the FAAC distribution for October 2024 also highlighted other
areas that merit the attention of the fiscal authorities. At N10.93 trillion, the
Federal deficit is 80 per cent above the projection for the period January to
August 2024. There is a shortfall (60.22 per cent) in FAAC and independent
revenue receipts. The expenditure side of the ledger shows over-spending on
recurrent items and underspending on capital expenditures (51.17 per cent).
Debt service payments (foreign) was 176 per cent over budget, with debt-toGDP ratio of 56 per cent, which exceeds the 40 per cent threshold of the
Debt Management Office. The fiscal position and debt dynamics indicated
clearly warrant serious attention, including the evident need for greater
efficiency in the use of borrowed funds. This will further strengthen Nigeria’s
ability to conduct fiscal policy which deteriorated slowly over the years.
For instance, urgent measures are needed to expeditiously execute
development projects and programs at the Federal, State and Local
Government levels. This entails a comprehensive review of the nation’s huge
portfolio of development projects whether these projects are financed by
borrowed funds – from the multilateral and bilateral lenders – or from
internally-generated resources. Some of these projects have suffered
inordinate delays from previous Administrations with huge undisbursed loan
balances outstanding. Such delays are clearly expensive as they unduly
delay development benefits to Nigerians. In view of the constrained fiscal
space, now is the time to re-evaluate the existing stock of projects to
determine whether their development objectives are still relevant. Where
necessary, undisbursed loan balances of poorly performing projects should
be cancelled or reallocated to alternative uses.
On the external sector and monetary policy, CBN staff presentations show
noteworthy green shoots since the era of tight money began. First, there has
been a marked improvement in the current account balance. Q3 2024 data
shows a surplus of US$6.29 billion vis-à-vis US$5.14 billion in Q2 2024; and the
overall balance of payment position recorded a surplus of US$3.79 billion.
Second, the external reserves stood at US$40.88 billion at end-October 2024,
a remarkable 16.9 months of import cover. The exchange rate remained
relatively stable for most of the second half of 2024, reflecting increased
capital inflows on account of attractive yields.
Third, tight monetary policy has slowed the rate of credit growth with broad
money supply (M3) down by around N1.7 trillion in October 2024 from the
preceding month. Credit to the private sector declined by N1.9 trillion during
the same period, indicating a slowing down in aggregate demand which will
further ease inflationary pressure. The banking sector expects credit demand
to continue to wane in the high-interest rate environment. This shock therapy
is necessary to correct years of policy missteps and to control inflation.

A most welcome development during the MPC meeting was the announced
reduction in the PMS price by the Dangote refinery. This will moderate the rise
in energy prices as well as transportation and food costs. And the stabilizing
naira will also moderate the pass-through effect of the exchange rate which
will dampen price pressures.
Rationale for my vote. It is not enough for the CBN to be willing to do
whatever it takes to fight inflation. It is vital that the Nigerian public also
believes that the CBN will indeed follow through. Expectations matter as the
CBN’s actions affect every aspect of economic life – albeit with long,
variable lags.
Taking account of the available data, our expectation is that inflation will
moderate by the end of the first quarter of 2025. Reducing inflation requires
consistent long-term actions. Now is thus not the appropriate time to ease off
on the inflation pedal. I therefore voted for a 25 basis points increase in the
MPR from 27.25 per cent to 27.50 per cent; and a hold on the CRR, the
asymmetric corridor and the liquidity ratio.

3. BALA MOH’D BELLO MoN
Opening Statement
The last Monetary Policy Committee meeting in 2024 was held in an
atmosphere of optimism despite the presence of lingering economic
challenges. This positive sentiment was largely due to the cumulative impact
of earlier increases in the Monetary Policy Rate (MPR) and several
complementary fiscal policy measures that have begun to show favourable
outcomes.

Notably, we observed moderation in inflation persistence, indicating that
previous strategies to manage price developments are gradually having
positive effects. Additionally, the external reserves position has improved,
providing a buffer against potential economic shocks and enhancing overall
financial stability. Also, the trajectory of output growth remains on an upward
trend, indicating that the economy is gaining momentum. I also considered
recent global developments that could influence our economic situation,
including shifts in the trend of international trade and global markets. This
comprehensive analysis ultimately guided my decision at the meeting,
reinforcing my confidence in the direction of the Committee’s monetary
policy.

Key Considerations
On the global front, the International Monetary Fund has projected output
growth at 3.2 per cent for 2024 and 2025 from 3.3 per cent in 2023. Risks to this
outlook, however, include ongoing geopolitical tensions, such as the lingering
war between Russia and Ukraine, as well as the crisis in the Middle East. There
is also heightened uncertainty following the outcome of the November 2024
United States elections, with fears of potential disruptions to global trade and
the current economic momentum. As a result, stakeholders are urged to
closely monitor these developments, as they will play a critical role in shaping
the economic landscape in the years to come.

Notwithstanding,
Nigeria’s
Real
Gross
Domestic
Product
(GDP)
has
maintained a positive trajectory, with a growth rate of 3.46 per cent in the
third quarter of 2024, compared with 3.19 and 2.54 per cent in the preceding
and corresponding periods, respectively. This growth, driven by both the oil
and non-oil sectors, with a notable contribution from the Services sector, is a
testament to the resilience of our economy. The non-oil sector grew by 3.37
per cent in the third quarter, compared with 2.80 per cent in the second
quarter, while the oil sector grew by 5.17 per cent (year-on-year), compared
with 10.15 per cent in the preceding quarter. The positive growth

momentum, shown by leading indicators and staff forecasts, is expected to
persist, providing a sense of stability and progress.

Notably, the external reserves position has grown remarkably to US$40.88
billion as of 21st November 2024 from US$40.06 billion at end-October 2024, a
development that strengthens the needed buffer to mitigate unforeseen risks
and reinforces the importance of ongoing efforts at sustaining improved
foreign exchange supply. The rising reserves position, alongside the relatively
stable exchange rate, would enhance Nigeria’s position as an attractive
investment destination.

The resilience of the domestic economy, bolstered by a strong financial
system with robust soundness indicators, instils confidence in the economic
structure. Major prudential ratios, such as capital adequacy, liquidity, and
Non-Performing Loans ratios, were within prudential limits, reflecting proactive
regulatory oversight and strong industry risk management practices.

Significant credit was extended to growth-enhancing sectors such as
agriculture, manufacturing and general commerce, as well as individuals
and households. This credit played a crucial role in stimulating economic
activities and supporting output performance, emphasizing the role of
financial institutions in the economy.

In addition, the results of stress tests showed that bank’s solvency and liquidity
ratios remained resilient in scenarios of potential severe macroeconomic
shocks. Continued vigilance is, however, required to ensure that the banking
system remains strong and stable amid lingering risks. Each one of us has a
role to play in this, and our collective vigilance is crucial for the stability of our
financial system.

Although inflation persistence has moderated, headline inflation, rose (yearon-year) to 33.88 per cent in October 2024 from 32.70 per cent in September
2024. On a month-on-month basis, it also rose to 2.64 per cent in October
2024, from 2.52 per cent in the previous month, with both the food and core
components contributing to the continued rise in headline inflation. Food
inflation rose further to 39.16 per cent in October 2024, from 37.77 per cent in
September, while core inflation also rose to 28.37 per cent in October 2024,
from 27.43 per cent in September.

Recent data indicates a notable moderation in the prices of farm produce,
underscoring the federal government's proactive measures aimed at
boosting productivity within the agricultural sector. These efforts include
initiatives designed to mitigate insecurity in regions critical to food production

across the country. Despite these positive developments, risks associated with
domestic price fluctuations persist, including climate conditions and
increased market demand. As a result, while the current situation shows
promise, vigilance and sustained collective efforts at mitigating the risks will
be necessary to navigate the challenges ahead.

Policy decision
While I note the broadly positive domestic trajectory, the uncertain short-term
outlook for domestic prices and emerging global headwinds, calls for
immediate and coordinated policy support. It is crucial that we strengthen
our policies to sustain Nigeria’s economic resilience in the face of these
challenges.
The monetary authority must therefore continuously anchor the expectations
of economic agents, given the risks to domestic price movements, and
reinforce its commitment to keep inflation in check. The monetary policy
response should, however, take cognizance of the need to support output
performance, which is important for the sustained resilience of the domestic
economy.

Over the course of the year, I have voted to tighten the stance of monetary
policy to rein in inflation. At this meeting, I found compelling reasons to
tighten the stance further, albeit at a slower pace. Therefore, I voted to
1. Raise the MPR by 25 basis points to 27.50 per cent from 27.25 per cent.
2. Retain the asymmetric corridor around the MPR at +500/-100 basis
points.
3. Retain the Cash Reserve Ratio of Deposit Money Banks at 50.00 per
cent and Merchant Banks at 16 per cent.
4. Retain the Liquidity Ratio at 30.00 per cent

4. BANDELE A.G. AMOO
Having reviewed the empirical developments in both the domestic and
international economies since the last MPC meeting, I hereby vote as follows:
(a) Raise the Monetary Policy Rate (MPR) by 25 basis points from 27.25 to
27.50 per cent.
(b) Retain the asymmetric corridor around the MPR at +500/-100 basis
points.
(c) Retain the Cash Reserve Ratio (CRR) at 50.0 per cent for Deposit
Money Banks (DMBs) and 16.0 per cent for Merchant Banks.
(d) Retain the Liquidity Ratio (LR) at 30.00 per cent.

My decision is influenced by the following developments.

1 Assessment of Global Growth and Inflation

The resilience witnessed in the recent past in global economic outlook
continued in November 2024. The steady but slow output expansion
continued despite escalating geopolitical tensions which heightened global
financial market uncertainty. Global average inflation is falling, giving rise to
precipitating monetary policy convergence among advanced economies.
The global PMI expanded to 52.3 index points in October 2024, from 51.9
index points in September 2024. The global headline inflation is projected to
decrease further from an average of 6.7% in 2023 to 5.8% in 2024 and 4.3% in
2025. The downside risks have, however, persisted as escalating geopolitical
tensions continue to further disrupt commodity prices, and increase
fragmentation of trade networks.
The current trend of lower policy rates in advanced countries, especially the
United States, is expected to persist, despite the ongoing policy vigilance
owing to the dynamics of geopolitical tensions. These developments require
prudence when designing an optimal policy response to mitigate the impact
of global spillovers such as those from attraction of capital inflows and
improving
exchange
rate
stability
to
improve
country
economic
fundamentals.
Global trade is projected to further rebound gradually in the last quarter of
2024 and 2025 driven by declining inflation and a fast-recovering Europe,
Asia and US economies. Consequently, it is expected to rise to 3.1% in 2024
and 3.4% in 2025, indicating significant shifts in trade patterns, amidst
identified challenges. Global debt continued to surge, driven largely by
increased borrowing by India, China and Mexico.

2 Domestic Economic Developments and Outlook

Domestic economic activities continued to be resilient in November 2024
when compared with October 2024 (Pre-MPC). Data from the NBS showed
that economic growth in Nigeria recorded modest increase as at third
quarter of 2024. The economy grew by 3.46% YoY (vs. 3.19% YoY in Q2:2024).
Growth in the quarter was spurred by expansion in both the oil (+5.17% YoY
vs. 10.15% YoY in Q2:2024) and non-oil (+3.37% YoY vs. 2.80% YoY in Q2:2024)
sectors. The services sector led the growth of the nonoil sector contribution
while the manufacturing and industries sectors posted negative contributions.
For 2024 full year data, we still expect the services sector to continue to
propel further growth, especially the financial and ICT sectors.
Financial system resilience remains solid. Banking industry resilience in terms of
capital and liquidity was also confirmed by the latest stress tests.
Furthermore, the health parameters of banks and other depository
corporations continued to be strong. The Capital Adequacy Ratio (CAR)
also remained stable at 14% while the NPLs and Liquidity ratio slightly fell to
4.6 and 56.2 percent respectively when compared to their levels the previous
month. The financial soundness indicators stood well to absorb risk and
support credit growth effectively. Meanwhile, non-performing loans (NPL), as
a proxy of credit risk, were also low (4.8%) in October 2024. However, credit
growth was reportedly constrained by the current level of CRR set at 50%. It is
believed that the CBN will continue to strengthen synergy with other
regulators to sustain financial system stability.
Nigeria’s Balance of Payments (BOP) position remained stable to support our
external sector stability. The BOP provisionally recorded a surplus in the 3rd
Quarter of 2024 driven by positive balances in the current account and net
asset acquisition positions. The overall account positively stood at
US$3.79billion as at Q3 of 2024. Meanwhile, portfolio inflows remain high,
recording a net inflow US$0.59 billion as at November 2024. The total foreign
exchange flows through the economy stood at US$6,175billion in September
2024 compared with US$2,570.6billion in August 2024. Furthermore, foreign
reserves at the end of October 2024 stood at US$39.68billion, equivalent to
several months of import cover. External reserves is projected to further
increase by year end due to expected reduction in import demand pressures
arising from the full deregulation of the downstream oil sector, reduced
petroleum products importation regime, increased inflows and other process
management by the CBN.
Data from the National Bureau of Statistics (NBS) reported that the headline
inflation rate for October 2024 was 33.88% from 33.20% in September 2024

and 27.33% in September 2023. Food inflation stood at 39.16% in October
2024 compared to 31.52% in September 2023 and 36.22% in September 2024.
Core inflation moved from 26.23% in September 2024 to 28.37% in October
2024. A further breakdown of the inflation data shows that Food and NonAlcoholic beverages were the major drivers of both year-on-year and monthon-month Headline inflation, contributing 16.65 and 1.15% respectively.
Opinion survey from the states showed that insecurity, production cost,
subsidy issues, exchange rate depreciation are the main factors driving
inflation in Nigeria.
Improved agricultural activity in recent months, occasioned by decline in
banditry/insecurity, improved supply of farm inputs, brighten the prospects of
expanded agricultural output. To further assure improved outcome on these
concerns, the Federal Government continued the implementation of “Order
2024” measures. There was more deployment of CNG buses/vehicles to the
states and suspension of Value Added Tax (VAT) on petroleum products
remained into the year end. Given the expected stability in petroleum
products pricing template of the functional domestic Refinery in the next few
months, we expect the inflation trend to reduce over a short span of time into
the last quarter of 2024. Restocking of the Government Strategic Grains
Reserves is reported to be on-going.
While we heartily welcome these measures which will rapidly improve real
sector production and price outcomes over the short-term horizon, it is crucial
to implement them with a defined exit strategy to avoid reversing gains in
domestic food and aggregate goods production/output.
Nevertheless, we shall continue to stress the urgency of addressing inflationary
pressure, which has continued to undermine price stability. While monetary
policy has moderated aggregate demand, production bottlenecks, rising
food and energy costs continue to drive price increases. High transportation
costs for farm produce and insecurity in food-producing areas also continue
to play key roles. The MPC must remain vigilant to prevent spillovers or second
round effects from persistent food inflation and preserve the gains made so
far in monetary policy credibility.

3 My Concern

The developments since the last MPC meeting indicate further uncertainty in
realising a durable disinflation trajectory towards the desired target. The
short-term upsides to inflation from food prices signals the potent effect of
macroeconomic shocks which may inhibit the moderation of headline
inflation in Nigeria. The agricultural crop outlook is turning out to be
uncertain, with improving prospects of declining output. Our inflation is not

likely to be contained on continuing transmission of past monetary policy
actions unless there are surprises in fiscal interventions and other sector
developments such as sudden petroleum price hikes witnessed in Nigeria
during September/October 2024. Issues like this may attract additional
measures from the MPC in future. I am hereby committed to the MPC team
vision to ensure durable alignment of inflation with desired target while
supporting growth in macro terms.
Going forward, the CBN should continue to optimize the full array of
monetary instruments available which includes strengthening its pro-market
monetary operations strategy to boost policy effectiveness in terms of
attracting foreign capital inflows and supporting efforts to strengthen the
naira. Mobilisation of household financial savings through innovative products
and services offering may help to reduce excess liquidity and help to shift
credit to the productive sectors. Furthermore, the Bank will need to remain
vigilant and take some measures on the orderly operations of digital lending
ecosystem in Nigeria; deepen the speed and efficiency of digital payments;
reposition the existing special purpose vehicles to give massive support to
agricultural production and processing.
Consequently, I believe that it is early to end the tightening cycle when the
enduring path to moderation in inflation rate and true exchange rate, is yet
to crystalise. A little tightening (25bps increase in MPR) is beneficial now, as
it allows previous hikes to further permeate the economy, aiming to rein in
rising inflation. The other rates – CRR, LR, and the asymmetric corridor may
remain unchanged. However, I am aware that the further hike in the MPR
may negatively affect real sector players, particularly regarding corporate
interest expenses on bank borrowings. The massive rebate on taxes, duties,
levies granted to small and medium businesses by the Order 2024, as well as
roll-out of CNG vehicles should continue to confer extensive financial relief to
the product pricing process for the affected sectors. When these happen,
inflation will be subdued in the interim and may further abate when other
long run measures set in.
4 Conclusion
The Nigerian economy presents a near-term picture of stability and strength.
The positive nexus between inflation and growth is well discussed in
economic literature. The country’s growth stories showed that we still have a
distance to cover. Almost every sector is on the path to desire state of
development. Fiscal consolidation is on-going, the financial sector remains
sound and resilient under proposed recapitalisation, the real sector has been
re-positioned and recovering and the social sector abounds with social
safety and poverty reduction policies and programmes. Institutions are being
strengthened to promote improved security and infrastructure. The external

sector demonstrates the strength of any economy and Nigeria’s own is
scaling to new peaks. Reforms in many sectors are underway. Global investor
optimism in Nigeria’s growth prospects is at its highest ever, so we should not
be complacent now, amidst rapidly evolving global conditions. We must
bring inflation to our desired level in Nigeria, despite the prevailing
macroeconomic conditions and outlook.

5. EMEM USORO
Global economic activities have continued to grow at a steady but modest
pace, supported by optimism in the services sector, particularly financial
services, despite escalating geopolitical tensions. The outcome of the recent
US election in which Donald Trump emerged as the 47th President of the
United States has generated a positive response in financial markets,
characterized by surging equity markets, rising stock futures, improved
treasury yields, and a strengthening U.S. dollar. The cryptocurrency market
also rallied, driven by the "Trump trade," reflecting investor confidence in the
new administration’s economic agenda and its potential to stimulate growth
and profitability. However, risks to the global outlook persist. Uncertainty
surrounding the new administration’s stance on the war in Ukraine, conflicts in
the Middle East, and U.S. trade policies, pose significant challenges to
regional and global growth.
Price pressures have emerged globally, signalling an end to recent
disinflationary trends. These pressures are driven by demand-side dynamics,
rising food and energy costs, and exchange rate pass-through to domestic
prices. While major central banks, including the U.S. Federal Reserve, have
stayed on course with their easing cycles to support growth, the balance of
risks remains tilted towards geopolitical instability and climate-related
economic shocks.
On the domestic front, inflationary concerns have intensified since the last
Monetary Policy Committee (MPC) meeting, with headline inflation rising for
the second consecutive month. This increase reflects higher food costs,
lingering inflation expectations, and the cascading effect of adjustments to
prices of premium motor spirit (PMS) across the Consumer Price Index (CPI)
basket. Core inflation has also edged upwards, driven by supply-side
constraints, structural issues, and exchange rate pass-through to domestic
prices. Inferences from this development signals that recent price dynamics is
more supply-driven than demand-driven.
Inflation readings in October were contemporaneous with contractions in
economic activities, evidenced by a decline in the Purchasing Managers’
Index (PMI) after two months of expansion. The contraction was primarily
driven by persistent weaknesses in the industrial sector, alongside slow growth
in the agriculture and services sectors.
Unpacking other salient drivers of recent price pressures is vital, particularly
the expansion of broad money supply, which has surpassed its indicative

growth target since the beginning of the year, thus presenting inflationary
risks. However, recent monetary policy tightening measures have successfully
curtailed deceleration in base money growth, reducing banking system
liquidity and stabilizing the money multiplier.
Other significant pressures on price stability include widening fiscal deficits
stemming from constrained government revenue, exchange rate volatility,
pessimistic inflation expectations fuelled by seasonal factors, and disruptions
to supply chains associated with climate change. Despite these challenges,
the financial system has remained resilient, supported by a tight monetary
policy stance.
The outlook for growth in the domestic economy remains cautiously
optimistic, with near-term growth expected to improve, supported by
increased crude oil production and fiscal measures aimed at boosting the
agriculture and services sectors. However, inflationary pressures are likely to
remain elevated, driven by the pass-through effects of PMS price
adjustments,
exchange
rate
volatility,
and
supply-side
constraints
exacerbated by climatic factors.
The external sector outlook is bolstered by favourable crude oil prices,
increased domestic production, and the anticipated value-chain expansion
from the operationalization of the Dangote and Port Harcourt refineries.
Furthermore, the tight monetary policy stance is expected to attract capital
flows, thereby supporting accretion to external reserves, exchange rate
stability and expansion of the fiscal space.
Nonetheless, downside risks to the outlook remain significant. Escalating
geopolitical tensions could adversely affect global growth, reducing Nigeria’s
export earnings, exacerbating fiscal deficits, and dampening domestic
economic activity. Persisting inflationary pressures, negative inflation
expectations, and year-end seasonal demand could also strain the domestic
economy further.
In the face of these challenges, a balanced and data-driven approach to
monetary policy remains critical. Anchoring inflation expectations and
safeguarding the disinflationary gains achieved so far are essential to
ensuring price stability. While acknowledging the impact of recent monetary
tightening on borrowing costs, it is imperative to weigh the long-term benefits
of price stability and sustainable economic growth against short-term
challenges. The commitment to fostering macroeconomic stability will guide
the policy direction moving forward.

2.0
My Decision
On the basis of the various global and domestic developments outlined
above, the outlook for inflation remains broadly uncertain; a steadfast
commitment to ensuring long-term stability is, however, essential to effectively
navigate these challenges. Consequently, I voted to:
i.
Raise the MPR by 25 basis points to 27.50% from 27.25%, to further tighten
financial conditions, reduce the negative policy rate gap and attract
more capital inflows to stabilize the naira exchange rate;
ii.
Retain the asymmetric corridor at MPR +500/-100 basis points;
iii.
Retain the CRR at 50% for commercial banks and 16% for merchant
banks to enhance monetary control; and
iv.
Retain the LR at 30.0%.

6. LYDIA SHEHU JAFIYA
Global economic growth has remained relatively stable but showing uneven
progress across economies. While some Advanced Economies are witnessing
economic expansion, some in the Emerging Markets and Developing
Economies (EMDEs) are experiencing a decelerating trend. The International
Monetary Fund (World Economic Outlook, October 2024) forecasts global
growth at 3.2 per cent apiece in 2024 and 2025, from 3.3 percent in 2023.
Similarly, growth in the Advanced Economies and EMDEs are projected to
remain stable at 1.8 and 4.2 per cent in 2024 and 2025, respectively,
reflecting the challenges posed by the destabilizing effects of geopolitical
crisis, tight financial conditions, and the uncertainties around major
Advanced Economies.
With global inflation continuing to moderate, the International Monetary
Fund in the World Economic Outlook of October 2024 has forecast inflation in
2024 and 2025 to moderate to 5.8 and 4.3 per cent, respectively, from 6.7 per
cent in 2023. Inflation in the Advanced Economies has fallen almost to prepandemic levels and is expected to sustain its deceleration for the rest of
2024. This is largely due to the continued progress in disinflation, buoyed by a
well-calibrated monetary policy tightening cycle over several months. As
such, inflation is projected to decelerate to their long run objectives in 2025,
falling from 2.6 per cent in 2024 to 2.0 per cent in 2025. In the EMDEs, inflation
is projected to moderate to 7.9 per cent in 2024, and further slow to 5.9 per
cent in 2025, due to expected decline in food and energy prices.
Global trade is projected to grow by 3.1 and 3.4 per cent in 2024 and 2025,
respectively, but confronted with major risks such as the escalation of the
Middle East crisis which may likely spillover to the global supply chain.
THE DOMESTIC ECONOMY
Domestic economic growth continued its upward trend, with real GDP (yearon-year) growing by 3.46 per cent compared to 3.19 and 2.54 per cent in Q2
2024 and Q3 2023, respectively. The non-oil sector grew by 3.37 per cent in
Q3 2024, higher by 0.62 percentage points compared to 2.75 per cent in the
corresponding quarter of 2023, and by 0.57 percentage points over 2.80 per
cent in the second quarter of 2024. Growth in the non-oil sector was driven by
the Services sector which contributed 53.58 per cent to real GDP.
Headline inflation remained elevated at 33.88 per cent in October 2024,
increasing by 1.18 percentage points from 32.70 per cent in September 2024.
On a month-on-month basis, headline inflation rose by 0.12 percentage

points above the September 2024 figure of 2.52 per cent. Food and energy
prices remained the main drivers of headline inflation evidenced by the
upward movement in the food and core components of the index
compared with the previous and corresponding months.
Monetary and Financial Sector Developments revealed an increase in Broad
Money Supply above its 2024 provisional benchmark, indicating an increase
in total liquidity.
Developments in the external sector points to a stronger external position,
despite persisting tight financial conditions and adverse impact on trade of
the various ongoing geopolitical crisis. In Q2 2024, the overall balance of
payments recorded a surplus, supported by the current account which
recorded a higher surplus due to an increased surplus in the goods account,
largely driven by a decline in import bills.
The external reserves stood at US$40.88 billion on 21st November 2024, up
from US$40.06 billion at end-October 2024. At this level, the external reserves
position can finance 17 months of imports. In the foreign exchange market,
the average naira exchange rate remained stable, albeit high, since June
2024, an indication of strong market recovery, following deliberate policies by
the monetary and fiscal authorities to stabilize the market.
Despite current macro-economic challenges, the Financial Soundness
Indicators (FSIs) of the banking industry were within their macroprudential
limits, a demonstration of firm regulatory oversight by the supervisory
authority.
CONSIDERATION FOR VOTING
The November 2024 Monetary Policy Committee (MPC) meeting held against
the backdrop of continued inflationary and exchange rate pressures, with
stronger growth momentum. Since its first meeting this year, the Committee
maintained a restrictive monetary policy stance to address the undesirable
consequences of rising inflation on cost of living and welfare of citizens.
Evidently, the tight monetary policy stance has continued to prove effective
in anchoring inflation expectations evidenced by the slowing trend in the
upward movement of the index, the stability in the foreign exchange market
and stable growth outcomes.
Whilst growth can be said to have improved, indicators of economic activity
– the Purchasing Managers Index (PMI) for October 2024, pointed to a
moderately decelerating trend, driven largely by contraction in Industry PMI,
indicating a contraction in economic activities in that month.

Staying focused on the Bank’s mandate of attaining price stability conducive
to inclusive growth, I am of the view that current persistence of inflation is the
result of a combination of structural and monetary factors. Therefore, a blend
of fiscal and monetary policy tools are required to address observed supply
side inefficiencies and close the output gap, as well as moderate excess
demand by draining surplus liquidity.
It is noteworthy that economic growth has remained resilient despite the
contractionary stance of monetary policy, aided by macro-fiscal measures to
improve investment in infrastructure, contain insecurity, and address adverse
climatic conditions particularly in the food producing belts of the country.
These, combined with strategic partnerships with the private sector,
particularly in the downstream oil and gas sector, are expected to boost
food and energy supplies and lead to a reduction in their prices in the near
to medium term.
While it seems obvious that a tight policy stance would remain appropriate at
this meeting to address rising inflation, I feel concerned about the
implications on the cost of credit to the private sector, investment and
production, as well as on the fiscal operations of government.
Furthermore, I believe that the tightening measures of the previous months
are yet to fully run their full course, considering that monetary policy
transmission comes with a medium-term lag.
Confronted with the optimal policy choice to address the rising spectre of
inflation and effectively anchor inflation expectations, I reckoned that
inflation and growth objectives are mutually inclusive, and given that inflation
is the major challenge at hand, while noting that growth has been upbeat in
recent quarters, I felt convinced that maintaining the prevailing tight
monetary policy stance is appropriate at this time, albeit moderately due to
other considerations highlighted above. I, therefore, voted for a moderate
increase in the MPR by 25.0 basis points to 27.5 per cent, whilst leaving all
other policy parameters at their extant levels.

7. LAMIDO ABUBAKAR YUGUDA
Global Macroeconomic Developments
As global output continues to grow at a steady pace, the International
Monetary Fund (IMF) projects growth to remain unchanged at 3.2 per cent in
2024 but increase marginally to 3.3 per cent in 2025.
Economic growth in the Advanced Economies (AE) is expected to remain at
1.8 per cent in 2024 and 2025 with the US showing higher output expansion
than both the EU and the UK. In the Emerging Market and Developing
Economies (EMDEs) growth is forecast at 4.2 per cent in both 2024 and 2025
with India and China leading with growth projections of 7.0 per cent and 4.8
per cent respectively. The robust growth in India is supported by strong
household consumption while the weakness in the Chinese property sector
has continued to weigh down on output.
Global inflation continues to moderate as both food and energy prices
decline and labour cost pressures in AEs continue to ease. The IMF has revised
its forecast for global inflation downwards to 5.8 per cent and 4.3 per cent in
2024 and 2025 respectively. Inflation in the AEs is forecast to fall to 2.6 per
cent and 2.0 per cent in 2024 and 2025 respectively, as it approaches the
long run objective of most AE central banks.
In the EMDEs inflation is projected to slow to 7.9 per cent in 2024 and 5.9 per
cent in 2025 owing to the decline in food and energy prices as well as
continued monetary policy tightening.
However, the crisis in the Middle East continues to pose a significant risk to the
inflation outlook, as does the announced plan by the US President-elect to
impose wide-ranging tariffs of up to 60 per cent on US imports. Both could
have severe repercussions on international trade flows with a potential
negative impact on global and domestic inflation.
Domestic Economic Developments
Nigeria’s GDP grew at 3.46 per cent in the third quarter of 2024. This is higher
than both the 2.54 per cent recorded in the corresponding period of 2023
and 3.19 per cent in the second quarter of 2024. This improved performance
in the third quarter of 2024 was on account of the strong performance of the
services sector which grew by 5.19 per cent and contributed 53.58 per cent
to aggregate output. The agricultural and industrial sectors grew by 1.14 per
cent and 2.18 per cent respectively during the quarter under review.

Oil output increased by 5.17 per cent in the third quarter of 2024 and
contributed 5.57 per cent to aggregate output, while oil production
averaged 1.47 million barrels per day during the same period.
The composite PMI contracted after two months of expansion to 49.6 index
points in October 2024 from 50.5 in September and 50.2 in August reflecting
the impact of inflation on business activities.
Headline inflation rose to 33.88 per cent in October 2024, a significant
increase of 1.18 percentage points from September 2024 (32.70 per cent)
marking an acceleration in the inflation rate. Core inflation (all items less farm
produce and energy) increased to 28.37 per cent in October 2024 from 27.43
per cent in September 2024. Among all the measures of inflation, food
inflation recorded the highest increase. Food inflation surged to 39.16 per
cent year-on-year in October 2024, a significant increase from 31.52 per cent
in October 2023.
Broad money (M3) grew by 38.33 per cent at the end of the third quarter of
2024 compared to December 2023 – a deviation of 22.73 per cent above the
provisional benchmark of 15.60 per cent for 2024. This growth was driven by
increases in both NFA and NDA reflecting increase in the local currency value
of foreign asset holdings and growth of claims on the Federal Government
and other sectors, respectively. The growth in broad money is inconsistent
with the current monetary policy tightening stance and could be
contributing to inflationary pressures.
The banking system remains strong, with key financial soundness indicators
such as the capital adequacy ratio (CAR), Non-Performing Loans (NPLs) ratio
and the liquidity ratio (LR) all within prudential limits.
The fiscal data as of August 2024 showed that FGN revenue fell short of target
by 60.2 per cent while expenditure achieved 84. 2 per cent of the budget
projection. Whereas capital expenditure underperformed by 51.2 per cent,
recurrent expenditure exceeded the budget target by 3 per cent primarily on
account of higher than projected foreign debt service. Consequently, the
fiscal deficit exceeded the budget projection by 80 per cent.
The public debt stock increased to NGN134.69 trillion in the second quarter of
2024 compared to NGN121.67 in the first quarter of 2024 owing to both
increased borrowing and revaluation of the foreign debt component.
The overall balance of payments recorded a surplus of US$2.47 billion in the
second quarter of 2024 compared to a deficit of US$0.95 billion in the
previous quarter. The gross external reserves position at the end of October
2024 was US$39.68 billion, equivalent to more than nine months of imports of
goods and services.

Key Risk Factors
The significant monetary policy tightening over the past one year, against a
backdrop of deepening collaboration between the monetary and fiscal
authorities, has helped significantly to stabilize the exchange rate and tame
inflation in the face of unprecedented domestic price developments.
Inflation had started trending down – falling for two consecutive months in
July and August 2024 - until the most recent hikes in the pump price of PMS to
levels considered consistent with current market realities. Output growth has
remained resilient while external buffers have been rebuilt. The balance of
payments is in surplus again and foreign exchange reserves have increased
significantly, owing to an increase in the current account surplus, and
enhanced personal remittance and capital inflows.
Oil production has improved marginally and if this is sustained it is expected
to reflect in higher government revenues. It is also reasonable to expect that
the cycle of PMS price hikes has run its course and oil subsidy has now been
effectively eliminated. In addition, the lagged effect of previous monetary
policy tightening continues to dampen prices and improve the outlook for
inflation.
However, there are risks to the outlook. Given the policy pronouncements of
the incoming US administration favouring increased US oil production, lower
global oil prices are a possibility. Nigeria must therefore continue efforts
aimed at diversifying from dependence on oil. Given its huge and growing
population and limited fiscal space, Nigeria must embrace well-designed
and well-governed PPPs to build and upgrade infrastructure, especially
power, railways, highways and inland waterways to realize the full potential
of its rich economy. This should lower the cost of power and transport,
encourage location of industries in the hinterland, increase production in the
export sector, promote import substitution, grow foreign exchange reserves,
improve per capita income and consumption spending, and enhance
Nigeria’s competitiveness as an investment destination for both FPI and FDI.
While inflation has generally come down significantly in the AEs, inflationary
pressures in many AEs have not completely disappeared and this may slow
the expected pace of monetary policy easing, leaving government bond
yields relatively elevated. While capital flows to EMDEs are expected to
continue, this may happen at a slower rate.
The FGN budget performance shows the dominance of recurrent
expenditure over capital expenditure and the fact that much of government
borrowing is used to finance recurrent rather than capital expenditure. In
order to reduce the structural rigidities keeping Nigeria from achieving
stronger non-inflationary economic growth consistent with its potential,

revenue must be gradually increased, and expenditure restructured in favour
of more capital spending.
In view of the foregoing, it is necessary to maintain the tight stance of
monetary policy in order to sustain the efforts at disinflation, maintain the
stability of the exchange rate and protect the external buffers.
Consequently, I voted with other members of the Committee to:
a) Raise the MPR by 25 basis points to 27.50 per cent from 27.25 per
cent;
b) Retain the asymmetric corridor around the MPR at +500/-100 basis
points; and
c) Retain the Cash Reserve Requirement: Deposit Money Banks at 50
per cent and Merchant Banks at 16 per cent;
d) Retain the Liquidity Ratio at 30 per cent.

8. MUHAMMAD SANI ABDULLAHI
My Vote
Inflation remains a significant challenge to the Nigerian economy despite
efforts this year by the Monetary Policy Committee's (MPC) to reverse its
trend. Previous measures, including a cumulative 850 basis points increase in
the policy rate, have yet to bring inflation under control, leaving real interest
rates in the negative region as inflationary pressures remain. A temporary
easing of price development in July and August was reversed in September
and October, with headline inflation reaching 33.88% year-on-year. This
resurgence is, largely due to higher prices of Premium Motor Spirit (PMS),
which pushed up transport costs while both core and imported inflation
remain a cause for concern.
To address these pressing challenges and guide inflation back to the target
range, further decisive action is required. I firmly believe that maintaining our
current policy course is necessary until we observe a definitive shift in inflation
trend and a sustained reduction in headline inflation. Therefore, I voted to:
1. Increase the MPR by 25.0 basis points, bringing it to 27.50% from 27.25%.
2. Retain the asymmetric corridor around the MPR at +500/-100 basis
points.
3. Increase the Cash Reserve Requirement (CRR) for deposit money
banks by 500 basis points to 50.00% and merchant banks by 200 basis
points to 16.00%.
4. Maintain the Liquidity Ratio at 30.00%.
My Considerations
Inflation Trends and Dynamics
The fight against inflation has proven to be a persistent challenge. While the
Committee’s previous responses showed promising signs in July and August
2024 with a decline in headline inflation, this progress was short-lived as
September and October saw a resurgence in inflationary pressures, with
headline inflation rising to 33.88% in October 2024, from 32.15% in August. This
resurgence was evident across various measures of inflation, food, core, and
imported inflation, underscoring the complexity of the challenge and the
need for a comprehensive policy response. Despite previous rate hikes and
complementary measures, the key drivers of inflation persist, demanding a
multifaceted approach that combines monetary and structural policy
actions.
.

Several factors contribute to this complex inflationary environment.
Domestically, supply-side constraints continue to disrupt the efficient flow of
goods and services, leading to increased costs. These constraints include
bottlenecks in the agricultural sector, stemming from insecurity in foodproducing regions, which limit food supply and drive-up prices. Inadequate
transportation infrastructure, particularly for perishable goods, and insufficient
storage facilities further exacerbate these challenges by contributing to
spoilage and higher costs.

Externally, imported inflation poses a significant challenge to domestic price
stability objectives. Nigeria's dependence on imported goods leaves the
economy vulnerable to fluctuations in global prices and exchange rate
movements. Currently, imported inflation stands at a concerning 40.96%,
highlighting the substantial impact of external price pressures on the
domestic economy. This vulnerability is exacerbated by the ongoing global
price increases for essential imports such as wheat, refined petroleum
products, and fertilizer, which are critical for domestic consumption and
production. Adding to these challenges, the recent rise in core inflation is
largely attributed to supply-side constraints, particularly the rise in Premium
Motor Spirit (PMS) and other energy prices which has significantly impacted
transport and logistics costs, further feeding into headline inflation.
To effectively tackle inflation, a multi-pronged approach that integrates
fiscal, monetary, and structural policies is essential. While monetary tightening
measures play a vital role in managing aggregate demand, its full impact
may take time to materialise if not complemented adequately by fiscal and
structural policies. to address the underlying causes of inflation.
Key actions already taken by the Committee include tightening monetary
policy to curb excess demand and manage inflation expectations, while the
fiscal authority is also addressing supply-side issues such as infrastructure gaps
and ramping up food production. Additionally, the passthrough effect of
exchange rate fluctuations remain significant, as imported inflation is closely
tied to changes in the exchange rate. This dynamic is central in the New
Keynesian Phillips Curve with exchange rate debate. Thus, over the long term,
stabilizing the currency, improving export competitiveness, and ensuring a
stable fiscal environment will be critical to achieving sustainable inflation
control. As part of a broader strategy to tackle inflation, stronger exports
could help stabilize the exchange rate by reducing net imports, thus easing
inflationary pressures. In addition, current efforts in refining the monetary
policy implementation framework to strengthen the transmission mechanism
of our monetary policy actions.

To address food inflation specifically, targeted investments in transportation
and storage infrastructure for food and other agricultural products are
critical. Reducing supply chain bottlenecks and transportation costs will thus
help lower food prices. Tackling core inflation requires mitigating supply-side
constraints, such as the rising cost of PMS, which has driven up transport and
logistics expenses significantly. Current initiatives to enhance domestic
refining capacity are expected to reduce the reliance on imported refined
petroleum products, thereby mitigating the pass-through effects of prior
shocks and stabilizing the local currency.

Domestic Economic Developments
External Sector
Nigeria’s external sector remains resilient, with a Balance of Payment (BOP)
surplus of US$6.287 billion in Q3 2024, driven by surpluses in goods accounts
and robust remittance inflow. This trend, if sustained, could impact positively
on the exchange rate. The Bank’s reforms have improved external reserves to
USD 40.88 billion as of November 19, 2024, providing coverage for 17 months
of imports. Measures to sustain and expand export earnings, alongside
improved remittance inflows, will further strengthen the external sector and
support exchange rate stability.
Formal remittance inflows reached USD 4.18 billion as of October 2024,
reflecting a significant improvement. The launch of the NIBBS Non-Resident
Accounts in October aims to expand the remittance space, reduce barriers
for Nigerians in diaspora, and align with national goals to double remittance
inflows into Nigeria. Additionally, measures are being implemented to
strengthen the existing regulatory framework and remove Nigeria from the
FATF/AML Grey List. These initiatives will no doubt improve foreign exchange
inflows, support forex market stability, and mitigate inflationary pressures.
Other Developments in the Economy
On output, Nigeria’s economy showed signs of acceleration in Q3 2024, with
real GDP expanding by 3.46% year-on-year, up from 3.19% in Q2 2024.
Growth was largely driven by the Services sector, which recorded a robust
growth of 5.19%, significantly boosting output. However, the Purchasing
Managers Index (PMI) decelerated moderately to 49.60 in October 2024,
from 50.50 in September, reflecting the impact of high input prices across key
sectors, including industry, agricultural, and services.

Despite the positive GDP growth, challenges remain and need to be
addressed. High input prices are impacting various sectors, and the
deceleration in the PMI suggests potential headwinds to economic activities.
Addressing these challenges will require a focus on improving productivity,
enhancing competitiveness, and mitigating the impact of high input costs on
businesses.
Developments in the labour market in Q3 2024 were encouraging, with
unemployment rate declining to 4.3%, from 5.3% in Q2 2024. Time-related
underemployment rate also dropped to 9.2%, with rural unemployment
improving to 2.8% in Q3 2024, from 4.3% in Q2. These improvements are
expected to boost consumer spending, reduce poverty, and promote longterm economic prosperity.
Broad money liabilities recorded a month-on-month decrease of about N1.7
trillion in October 2024, marking the first decrease in nine months, driven by
contractions in both private sector credit and foreign currency deposits.
The banking sector remains robust, continuing to support economic activities,
with non-Performing Loans (NPLs) well below the prudential threshold of 5.0%.
In addition, the Central Bank remains vigilant in ensuring financial system
stability and soundness.
Despite the positive trends in the external and other sectors, risks to the fiscal
outlook include rising public debt, which reached approximately 56% of GDP
by the end of Q2 2024, and the declining oil revenue projections for 2025.
These factors could exacerbate Nigeria’s debt situation. However, the fiscal
outlook could improve with increased revenue mobilization and the
implementation of measures to rebuild fiscal buffers as outlined by the
Presidential Fiscal Policy and Tax Reforms Committee.
My decision to vote for a 25-basis-point increase in the policy rate, while
keeping other parameters constant, reflects my commitment to addressing
inflationary pressures, ensuring price stability, and supporting long-term
economic growth. This decision aligns with the established policy framework,
balancing the need for sustained economic expansion with effective inflation
management. I am confident that this policy stance, in conjunction with
complementary fiscal and structural measures, will contribute to achieving
our
macroeconomic
objectives
and
foster
sustainable
economic
development.

9. MURTALA SABO SAGAGI
Context
The legacy issues that constrained the sustainable growth of the Nigerian
economy are yet to be overcome even with the massive reforms
implemented by the government. The structural rigidities, geopolitical
tensions, excessive government spending, unabated use of cash by the
government and populace as well as weak institutions continue to limit policy
transmission mechanisms and present challenges to the achievement of
Nigeria’s ambition towards a one trillion dollar economy. Accordingly, while
the Central Bank of Nigeria has continued to implement policies that aim to
ensure price and foreign exchange stability which would, in turn, stimulate
growth and employment generation, the efficacy of the policies largely
depend on effective fiscal-monetary policy coordination.
Global and domestic environments
Inflation and regional tensions were the main source of the volatilities
witnessed in most of 2024. This trend is gradually improving and the prospect
for global stability is positive. The global economy is growing modestly and
the prospect for further growth remains positive. Growth in the Advanced
Economies is projected at 1.8 per cent in 2024, and expected to be driven by
US which is projected to grow by 2.8%. The improved market confidence that
greeted the emergence of Donald Trump, as the elected President, is an
endorsement to the anticipated shift in US economic policies. In the Emerging
Markets and Developing Economies (EMDEs) growth is moderating at 4.2 per
cent and it is expected to remain at the same level in 2025. Within the EMDEs,
India is also experiencing modest growth as a result of increased consumer
demand while growth in China slows due to limited consumer spending. In
Sub-Saharan Africa, economic growth is expected to rise from 3.4% in 2023 to
3.8% in 2024 (IMF, 2024).
Global inflation eased from 6.7% in 2023 to 5.8% in 2024 (IMF, 2024). The
decline in inflation is partly due to the sustained tight monetary stance by
central banks and fiscal policies to address food and energy supply gaps.
The coordinated approach to addressing global inflation and lessening
supply chain disruptions will further reduce inflation to 4.3% in 2025. With
positive outlook for growth, further rate cuts in 2025 would, in turn, spur global
growth and reduce unemployment. Already, private consumption is
stimulating a surge in equity markets, stocks and treasury yields in the US.
In Nigeria, year-on-year headline inflation increased to 33.88 per cent in
October 2024 compared with 32.7 per cent in September. At the same time,
real Gross Domestic Product (GDP) grew by 3.46% (year-on-year) in the third

quarter of 2024. This growth is higher than the 2.54% recorded in the third
quarter of 2023 and higher than the second quarter growth of 3.19%. The
exchange rate improved from ₦1,660.33/US$ on September 24, 2024, to
₦1,647.47/US$ by the end of October 2024, while the overall balance of
payments recorded a surplus of US$2.47 billion in Q2 2024, from a deficit of
US$0.95 billion in Q1 2024. The external reserves increased by 0.99 per cent to
US$39.68 billion at-end October 2024, from US$ 39.29 billion at-end September
2024. With the current measures implemented by the Bank, external reserves
is expected to improve modestly in November.
Even with the improved balance of payment and foreign reserves, the public
debt stock grew to N134.69 trillion in Q2 2024, from N121.67 trillion in Q1 2024.
This was caused largely by the exchange rate revaluation within the period,
and increased domestic borrowings to fund government expenditure. The
fiscal performance between January and August 2024 showed a revenue
shortfall with over budgeted expenditures. As of August 2024, the fiscal deficit
exceeded the budget projection (N6, 070.16) billion by 80.13 per cent at
(N10, 934.24) billion). The excess spending by the government is one of the
biggest monetary policy challenges in the country. The rate increases
overtime stimulated increased demand for NTBs due to the attractive yields.
However, activities in the equities market remained weak owing to the
improved yields in the fixed income market.
Major considerations
i.
GDP increased despite the tightening stance.
ii.
Inflation ticked up in October mainly because of increase in food
prices
iii.
Cash outside the banking system rose by 271.85 billion to 4.28billion in
October. This is not unconnected to the hyper activities of middlemen
as public and private funds were injected to mop up agricultural
commodities.
iv.
The slowdown in China may impact Nigeria’s exports
v.
Increasing public debt due to shortfall in revenues and increasing
public spending may negatively impact inflation
vi.
Positive current account balance mainly due to reduction in imports
vii.
Foreign reserve has increased to US$39.69 billion at end-October 2024

Conclusions
The implication of the global economic outlook to Nigeria is mixed. While the
positive growth and easing inflation provide a measure of stability, the
continued high yields in advanced economies may reduce inflows to EMDEs.
With a high foreign debt portfolio and foreign exchange challenges, Nigeria
requires continues inflow of foreign exchange. At the moment, a stronger

naira is critical to signal stability in the exchange rate market and expectantly
to anchor inflation. The inflows expected from maintaining a tight monetary
stance will also provide government with an opportunity to restructure the
country’s huge debt profile which is increasingly becoming unsustainable.
Indeed, the country must fix its fundamentals to guarantee sustained inflow of
both foreign investments and export revenues.
My Vote
• Increase the Monetary Policy Rate (MPR) by 25 basis points.
• Retain Asymmetric Corridor around the MPR to +500-100 basis points.
• Retain the Cash Reserve Ratio of Deposit Money Banks at 50.0 per
cent.
• Retain the Cash Reserve Ratio of Merchant Banks at 16.0 per cent.
• Retain the Liquidity Ratio at 30.0 per cent.

Recommendations
i.
The enabling environment for both foreign and domestic investors must
be improved in the short to medium term. Tremendous attention should
be placed on doing business at the sub-national levels.
ii.
Attaining food security is still a challenge for the country. A holistic
approach to agricultural transformation involving federal government
and states is needed urgently.
iii.
Efforts to enhance security across the country should be intensified and
the governance of the security architecture must be improved.
iv.
The operating and transaction costs of producers are eventually
passed on to the consumers. There is the need for integrated policy
interventions to support technology upgrading and innovations to
enhance the competitiveness and cost-effectiveness of domestic
producers. With lower prices, consumer spending and investments will
be enhanced.

10. MUSTAPHA AKINKUNMI
Context
Inflation surged to 33.88% year-on-year, largely driven by the increase in PMS
prices in September and October 2024, rising from N617 to N897 and N1,030
per liter. High inflation continues to worsen food insecurity, which has
escalated to 62.4% (NBS 2023/2024 Household Living Standard Survey),
compared to 36.9% (NBS 2018/2019 Household Living Standard Survey). The
unified exchange rate approach has significantly improved transparency in
the foreign exchange market, almost eliminating the spread across markets.
However, there remains a need to focus on revenue inflows from crude oil
sales, particularly with the potential supply shock in 2025 from the US
Government as the newly elected President takes Office. Nigeria’s GDP
growth accelerated to 3.46% in Q3 2024, driven by the services sector, and
surpassing the 3.04% growth in Q2 2024. However, real sector growth remains
stagnant, with agriculture growth unchanged at 1.4% and manufacturing
growth declining to 0.9% in Q3 2024. To maintain the mandate of price and
financial sector stability amidst these challenges, I recommended a further
increase of the Monetary Policy Rate (MPR) while retaining the asymmetric
corridor of +500 and -100 basis points around the MPR.
The Global Economy
Global economic growth remains heavily reliant on emerging economies,
which are projected to grow at nearly 7%, while growth in the Advanced
Economies is expected to stabilize around 3%. According to the revised IMF
Growth Projection in October 2024, Spain is expected to lead the advanced
economies with a growth rate of 2.9%, slightly ahead of the US at 2.8%. In the
Emerging Markets and Developing Economies (EMDEs), India is poised to take
the lead with an impressive 7.8% growth rate, while China is projected to
grow at 4.8% due to its weakened property sector. However, these
anticipated growth rates may face risks from supply disruptions driven by
escalating geopolitical tensions and tariff threats by the incoming President
Trump.
Advanced economies outperformed expectations, while the UK economy
showed modest growth: In the US, the annual growth rate of real GDP
reached 2.8% in Q3 2024, down slightly from 3.0% in Q2 2024, driven by
increased consumer spending and private investment. The Eurozone’s GDP
grew by 0.4% in Q3 2024 (compared to 0.2% in Q2 2024), supported by
stronger-than-expected growth in Germany and France. The UK economy
performed below expectation, growing modestly at 0.1%. This growth was

primarily driven by the services sector, which grew by 0.1%, and the
construction industry, which recorded a growth of 0.8%. The production
sector, however, contracted by 0.2% compared to the previous quarter,
reflecting weaker performance in manufacturing and industrial activities. In,
Japan, real GDP expanded by 0.9% on an annualized basis in Q3 2024,
marking the second consecutive quarter of positive growth. This improvement
was driven by private consumption and resident tax cuts.
Faster growth continues to drive expansion in EMDEs: In Q3 2024, Nigeria’s
GDP grew by 3.5%, reflecting an improvement of 0.27% compared to the
previous quarter. This growth was primarily driven by the services sector,
which contributed about 54% to aggregate output. Similarly, China’s annual
growth rose to 4.6% in Q3 2024, spurred by improvements in factory output,
retail sales, and fixed asset investments. Meanwhile, India recorded a fasterthan-expected expansion of 8.4% in Q3 2024, driven mainly by investment
and manufacturing activities. Looking ahead, strong growth is anticipated in
EMDEs, with growth in India projected at 7.0%, while China is expected to
grow at 4.8% in 2024. Nigeria is forecasted to achieve an annual growth rate
of 2.9%, supported by improvements in oil and agriculture outputs, supported
by enhanced security. Additionally, net inflows of US$1.9 billion into emerging
markets in October 2024 have put investors in a favourable position.
Inflation pressures persist, with Japan as a notable exception in October 2024:
In the Advanced Economies, inflation is projected at 2.6% in 2024 and 2.0% in
2025. However, ongoing conflicts in Ukraine and the Middle East may elevate
inflation risks. In the US, inflation rose slightly to 2.6% in October 2024 from 2.4%
in September 2024, driven by a decline in gasoline prices and modest
grocery inflation, while housing inflation remained persistently high. In the
Eurozone, inflation increased to 2.3% in November 2024 from 2.0% in October
2024. Similarly, inflation in the UK rose from 1.7% in September to 2.3% in
October 2024. However, in Japan inflation declined to 2.3% in October from
2.5% in the previous month, primarily due to decline in core inflation excluding
fresh food prices.
Mixed directions showcased in EMDEs inflation rates in October 2024: In the
EMDEs, inflation is projected to reach 7.9% in 2024 before declining to 5.9% in
2025, driven by anticipated reductions in food and energy prices and
continued monetary tightening amid the Middle East crisis. In South Africa,
inflation decreased consistently to 2.8% in October 2024 from 3.8% in
September. Inflation in China, dropped to 0.3% in October 2024 from 0.4% in
July, mainly due to declines in non-food prices, transport and housing costs. In
contrast, inflation in India surged to 6.2% in October 2024 from 5.5% in
September, primarily due to rising food prices. In Ghana and Egyptrecorded
inflation increased to 22.1% and 26.5%, respectively, in October, up from

21.5% and 26.4% in the previous month. In Kenya, inflation rose by 0.1% in
November 2024, driven by higher prices for food and non-alcoholic
beverages.
Monetary policy rates in the global space remain divergent: The US Federal
Reserve reduced its policy rate by 25 basis points, bringing it to a range of
4.75-5.00%. Similarly, the ECB, Canada, and the Bank of England cut their
rates to 3.25%, 3.75%, and 4.75%, respectively. Japan maintained its rate at
0.25%, unchanged since its August meeting. Most EMDEs either retained or
lowered their rates, with the exception of Nigeria, which tightened its
monetary policy rate by 25 basis points to 27.50% during its November
meeting. Ghana and South Africa reduced their policy rates by 200 basis
points and 25 basis points, respectively, to 27% and 8%. Egypt, however,
retained its rate at 27.25%.
Global economic health improved slightly in October 2024 to 52.3 index
points against 51.9 points in the previous month primarily driven by growth in
new business: The Global Services PMI rose from 52.9 index points to 53.1
index points in October, supported by growth in new business, new export
orders, and a reduction in input prices. Meanwhile, the Global Manufacturing
PMI improved to 49.4 index points in October 2024, although it remained
below the 50.0 points threshold, reflecting contractions in new orders,
employment, and stock of purchases.
The Domestic Economy
Despite the persistent inflationary pressures, Nigeria’s economic growth rate
continued to improve: The economy grew by 3.46% in Q3 2024, compared to
3.19% in Q2 2024, driven by the non-oil sector, which contributed 94.43% to
overall growth. Robust growth of 5.19% in the services sector bolstered the
country’s improved performance, while in the real sector, agriculture and
manufacturing grew steadily at 1.14% and 0.92%, respectively. Additionally,
the economy’s health condition improved slightly by 0.13 basis point,
surpassing the 50.0 index point threshold in Q3 2024, supported by resilient
economic activities in the services and agriculture sectors.
Oil production keeps closing the OPEC Quota gap as it attained 1.55 mbpd in
Q2 2024 against 1.41 mbpd in 2023: The upward trend in the oil upstream
industry was driven by improved security and the new Utapate oil stream,
which is currently producing 28,000 bpd with plans to increase production to
50,000 bpd. This positive trend is expected to continue in the coming years as
issues such as crude oil theft and aging infrastructure are effectively
addressed. Consequently, this would further boost the Q3 2024 oil sector
growth of 5.17% (compared to 10.15% in Q2 2024), positioning the country

competitively among other oil-producing peers such as Libya, Algeria, and
Congo.
However,
the
country’s
downstream
performance
remains
constrained by inefficiencies in the PMS market, which have recently pushed
the cost of energy over N1,000 per litre.
Nigeria’s headline inflation rose: Inflation rose by 118 basis points to 33.88% in
October 2024, up from 32.70% in September 2024. This increase was driven by
the rising costs of food and non-alcoholic beverages, exacerbated by
insecurity in farming communities, poor transportation infrastructure, high
energy costs, exchange rate pressures, and the removal of the PMS subsidy.
Food inflation also climbed by 139 basis points to 39.16% in October 2024,
compared to 37.77% in September 2024, largely due to the impact of
flooding in key food-producing states. Similar inflationary trends are evident
globally, with Egypt and Ghana experiencing double-digit inflation rates
exceeding 20%, comparable to Nigeria's situation. The external reserves also
increased to US$40.2 billion by the end of November 2024, up from US$39.7
billion in October 2024, driven by crude oil-related tax receipts and FX
purchases. Oil revenue declined by 1.9% to US$12.2 billion in Q2 2024
compared to Q1 2024, attributed to reduced earnings from oil and gas
exports. Crude oil and gas accounted for 87.4% of total exports, with Europe
as the primary destination. Global crude oil prices increased marginally to
$68.595 per barrel at the end of November 2024 compared to the previous
month. Nigeria contributed approximately 5% of OPEC’s total crude oil
production (26.97 mbpd) in October 2024. As global oil supply continues to
rise, the US is expected to lead non-OPEC supply growth in both 2024 and
2025, with Canada, Guyana, and Argentina also projected to increase their
output.
The bulk of banking industry assets attained a year-on-year growth of 44.16
per cent in October 2024. Commercial banks accounted for the largest share
of industry assets (96.8%), deposits (97.2%), and credit (98.1%). Additionally,
banks with international authorization accounted for the highest share of
industry assets, deposits, and credit at 71.2%, 71.4%, and 72.1%, respectively.
The banking industry’s assets grew year-on-year by 44.16% to ₦157.51 trillion in
October 2024. Deposits increased by 48.15% year-on-year to ₦95.42 trillion,
while credit rose by 36.72% year-on-year to ₦58.97 trillion. However, on a
monthly basis, industry assets declined by ₦0.21 trillion (0.13%) in October
2024, driven by decreases in total investments and net loans. Deposits also fell
by ₦0.37 trillion (0.39%), primarily due to declines in domiciliary account
balances. Similarly, industry credit decreased by ₦0.09 trillion (0.15%) in
October 2024 compared to September 2024.

Decision
Amidst domestic challenges such as persistent inflationary pressures and
continuous naira appreciation, it is both urgent and critical to control inflation
and further strengthen the naira to build robust resilience against existing and
potential global shocks. Additionally, it is vital to closely monitor the
anticipated positive impacts of the 850-basis point hike in the MPR since
February 2024, coupled with increasing oil production and ongoing fiscal
reforms.
However, while the increased MPR has come at the expense of growth, it has
also contributed to improved bank profitability, enhanced foreign exchange
reserves, moderated inflation, and increased pension assets.
In light of the above, I voted to increase the Monetary Policy Rate (MPR) by
25 basis points and to retain the asymmetric corridor of +500 and -100 basis
points around the MPR.

11. PHILIP IKEAZOR

Despite the continued tight stance, price levels remain elevated, and the
economy faces inflation persistence due to prolonged inflationary pressures.
In my view, a more aggressive stance is required, in circumstances, to curtail
the momentum and bring inflation under control in the near-term.

I therefore voted to:

1. Raise the MPR by 50 basis points to 27.75 from 27.25 per cent.

2. Retain the Asymmetric corridor around the MPR at +500/-100 basis
points.

3. Retain the Cash Reserve Ratio (CRR) of DMBs at 50.00 per cent.

4. Retain the Cash Reserve Ratio of Merchant Banks to 16.00 per cent.

5. Retain the Liquidity Ratio at 30.00 per cent.

Developments in the Global and Domestic Economy
Given a robust growth in trade, improvements in real incomes, and a more
accommodative monetary policy in several economies, albeit with a surge in
global debt, the outlook for global growth and inflation in 2024 and 2025
remained as projected by the International Monetary Fund (IMF) in the third
quarter of 2024.

Amidst the mixed outlook, most central banks are treading the path of
monetary policy normalization with cautious optimism given that the
outcome of the November 2024 United States election could reshape the
global business landscape. Consequently, in 2025, the global economy may
be confronted with heightened economic nationalism, trade deflection,
exchange rate volatility, and geopolitical uncertainty—factors that could
significantly alter the current dynamics of global growth and international
commodity prices.

In the domestic economy, the fiscal and monetary policy consolidation -
while not yet fully reflected in the general price level—is fostering a robust
monetary policy, maintaining financial stability and driving real growth. The
potential for growth remains positive, as real output grew by 3.46 per cent in
the third quarter, up from 2.92 per cent recorded in the second quarter of
2024, while headline inflation rose by 1.18 percentage points to 33.88 per

cent in October 2024, relative to 32.70 per cent in September 2024, driven by
core and food inflation.

Global growth is expected to remain resilient with declining inflation, despite
significant risks and uncertainties, while the domestic economy is expected to
achieve modest growth, a stable exchange rate, and a moderate
deceleration in the rate of change in inflation.

My Considerations
The Federal Government has implemented significant reforms to stabilize the
economy, resulting in modest growth and improved fiscal space over the last
two-quarters. With real output maintaining a steady growth, inflation,
exchange rate pressures, and banking system liquidity have remained high,
driven by the combination of rising energy prices, foreign exchange demand
pressure and exchange rate depreciation.

At end-October 2024, currency outside depository corporations grew by 24.9
per cent compared with 17.0 per cent recorded between September and
August, even though money supply growth declined to 35.9 per cent down
from 38.1 per cent in the same period. In terms of demand pressure on
foreign exchange, the concentration of imports in the non-productive sector
reflects a mismatch between foreign exchange demand and supply with the
importation of Premium Motor Spirit and gas constituting 2.821 billion $USD of
the top 10 imports into Nigeria in Q2-2024. Although this represents a decline
from 2.922 billion $USD in Q1-2024, it still amounts to significant pressure on the
utilization of foreign exchange and crowds out the productive sector that
could have been a potential source of foreign exchange supply.

Notwithstanding the tight monetary policy stance, the economy maintained
a steady growth, a clear indication that the tight monetary policy cycle of
the Bank is yet to reach its optimal level. Implicitly, the economy can attain
low inflation without trading-off real output growth. Therefore, in supporting a
hike in the policy rate, I considered the fact that a contractionary stance
could slow down inflation without significantly constraining real growth.

To address these, a substantial hike in the policy rate will not only ensure that
monetary policy sustains the pathway to stable prices but strengthens market
expectations and the commitment to stabilize the economy.
I was, however, mindful of the implications of a similar stance on CRR and its
impact on the intermediatory role of the banking sector, particularly in the
ongoing economic reforms of the Federal Government. Therefore, raising the
CRR at this time could worsen the liquidity position of banks and hamper the
supply of credit to the economy.

In addition, a simultaneous hike in MPR and CRR, could further raise the cost
of production and complicate manufacturing capacity utilization which
dropped from 52.4 in the last quarter of 2023 to 50 per cent in the second
quarter of 2024. This could further increase cost-push inflation and worsen the
Non-Performing Loan ratio.

In the last MPC, I provided forward guidance on the intension to support a
hike in rates if the fiscal actions of the Sub-national Governments continue to
weaken the effective transmission of monetary policy. The support for a hike
at this time was also meant to counteract the consequences of the frequent
fiscal injections by the Sub-national Governments which research has shown
to be a major source of inflation persistence in the economy.

In conclusion, in keeping to the course of economic policy reform of the
Federal Government, a supportive monetary policy is critical, to ensure a
non-inflationary economic reform.

12. OLAYEMI CARDOSO
Governor of the Central Bank of Nigeria and Chairman, Monetary Policy
Committee
The Monetary Policy Committee held its final meeting for the Year 2024
against the backdrop of mixed outcomes on key macroeconomic indicators.
With the nominal exchange rate exhibiting relative stability over the second
half of the year, it is cheering that the wide premium between the official
and parallel market rates has been reasonably curtailed and the confidence
of economic agents in the economy has reached a new high, manifesting in
renewed capital inflows and favorable current account position, which
cumulatively, have taken external reserves to over US$40 billion as at 22nd
November 2024.
On domestic output, growth numbers continued to show the resilience of the
economy with real GDP expanding by 3.46 per cent in Q3 2024 compared
with 3.19 per cent in Q2 2024 and 2.54 per cent in the corresponding period
of 2023. The performance has continued to be driven by both the oil and
non-oil sectors, and staff forecast has shown that the economy would grow
by 3.32 per cent in 2024.
On the global front, the outlook presents one of cautious optimism. It is
noteworthy that some of the central banks in the advanced economies have
commenced a policy rate-lowering cycle, but this is at a cautious pace.
While this development holds promise for emerging economies by potentially
improving capital flows, it is important to recognize that the ultimate
destination of capital is influenced by the domestic economic landscape. It is
therefore necessary to sustain ongoing reform efforts to improve the
fundamentals of the domestic economy and deliver macroeconomic
stability to position Nigeria as a preferred destination among emerging
markets.
The extent of policy tightening that has already been implemented this year
and the emerging results may tend to suggest the need for a hold option.
However, the reversal of the inflation trajectory witnessed in September
continued into October, with further uptick in inflation recorded due to the
adjustments to the retail price of Premium Motor Sprit in the third quarter of
the year. The latest inflation report indicates that headline inflation rose to
33.88 percent in October 2024, up from 32.70 percent in September 2024,
driven by persistent shocks and structural constraints as both food and core
components contributed to rising price levels. The outlook is equally fraught
with new risks, prompting an upward revision to our short-term forecast. Key
drivers include recent energy price adjustments for households and

businesses and the pass-through effects of exchange rate depreciation on
food, energy, and transportation costs. Furthermore, our efforts to mitigate
demand-side pressures, though yielding results, continued to be limited by
persistent high level of liquidity within the system.
It is more worrisome that the sticky headline inflation and negative outlook
portends the larger risk of de-anchoring inflation expectations by economic
agents and thereby contributes to the persistent increase in prices across the
economy. From the monetary policy perspective, the stance against
inflationary pressures must therefore continue to be unwavering and our
policy approach ought to be one of vigilance until we see a well entrenched
deceleration trend in the inflation trajectory.
My position derives further strength from the recognition that the positive
results so far, notably the increased capital flows and relative stability in the
foreign exchange market, alongside the narrowing of exchange rate
disparities across different market segments, has been largely due to the bold
tightening measures since the beginning of the year.
Looking ahead, I remain optimistic that if we remain steadfast in our efforts,
we can achieve our goals of stable and resilient macroeconomic
environment. By staying the course, we will not only solidify the gains from the
proactive policy measures, but we will also position the Nigerian economy for
robust and sustainable growth by achieving price stability.
Based on the foregoing and considering the balance of risk, I voted to:
1. Increase the MPR by 25 basis points from 27.25 per cent to 27.50 per cent.
2. Retain the asymmetric corridor around the MPR at -100/+500 basis points.
3. Retain the Cash Reserve Requirement (CRR) for Deposit Money Banks at 50
percent and Merchant Banks at 16 per cent.
4. Retain liquidity ratio at 30.00 per cent.

OLAYEMI CARDOSO
Governor
November 2024