CBN MPC Communique No. 151 - March 2024
Central bank: cbn | Type: statement | Date: 2024-03-26

MONETARY POLICY COMMUNIQUE NO.151
Date: Tuesday, 26 March 2024
Ref: CBN/MPC/COM/151/294
MONETARY POLICY RATE ADJUSTED BY
200 BASIS POINTS TO 24.75 PER CENT
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN)
held its 294th meeting on the 2 5th and 26th of March 2024 to review recent
economic and financial developments as well as assess risks to the outlook.
Decisions of the MPC
The Committee’s decisions are as follows:
1. Raise the MPR by 200 basis points to 24.75 per cent from 22.75 per cent.
2. Adjust the asymmetric corridor around the MPR to +100/-300 basis points
3. Retain the Cash Reserve Ratio of Deposit Money Banks at 45.0 per cent.
4. Adjust the Cash Reserve Ratio of Merchant Banks from 10.0 per cent to 14.0
per cent
5. Retain the Liquidity Ratio at 30.0 per cent
Considerations
The considerations of the Committee at this meeting focused on the current
inflationary pressures and the need to anchor inflation expectations as well as
ensure sustained exchange rate stability. These considerations underscore the
importance of the CBN ’s commitment to the price stability mandate and the
need to urgently bring inflation under control to ensure that purchasing power
of ordinary Nigerians is restored in the short to medium term.
MONETARY POLICY COMMUNIQUE NO.151
Members noted the continued rise in headline inflation, driven largely by food
prices because of supply shortages and high cost of logistics and distribution.
The Committee, therefore, was of the view that addressing food insecurity is
key to containing current inflationary pressures. On this note, Members
commended the ongoing efforts of the Federal Government toward s
addressing food insecurity, some of these measures include the provision of
various palliatives, release of grains from the strategic reserves, distribution of
seeds and fertilisers, as well as farm implements for dry season farming.
The Committee therefore called for the full implementation of the Federal
Government’s agricultural policies and programmes to improve food supply
and further advised for broader fiscal consolidation particularly on the
improvements of tax collection and tax-to-GDP ratio.
The Committee noted with satisfaction the level of stability achieved in the
foreign exchange market in the last few weeks. This , in the view of Members
reflects the impact of the Bank’s recent policy actions and reforms, as well as
increased transparency in the market . In addition, the Committee noted the
efforts of the Bank in offsetting verified foreign currency obligations, an action
that will greatly enhance investor confidence and attract foreign investments to
Nigeria.
The MPC also reviewed developments in the banking system and noted that
the industry remains safe, sound, and stable. The Committee thus, called on
the Bank to sustain its surveillance and ensure compliance of banks with
existing regulatory and macroprudential guidelines. The MPC also enjoined the
Bank to expedite action on the recapitalisation of banks to strengthen the
system against potential risks in an increasingly globalized world.
MONETARY POLICY COMMUNIQUE NO.151
Consequently, at this meeting, the MPC was faced with the option of either
progressing with its tightening cycle or hold , to observe the impact of the
previous rate hike and adjustment of the Cash Reserve Requirement. After
reviewing the balance of risks and the near -term inflation outlook, Members
were convinced of the need to progress with the tightening cycle.
Key Developments in the Domestic and Global Economies
Domestic headline inflation rose further to 31.70 per cent in February 2024
from 29.90 per cent in January . Food inflation accelerated to 37.92 per cent
from 35.41 per cent, while core inflation rose to 25.13 per cent from 23.59 per
cent. Key drivers of inflationary pressure remain the strong exchange rate
pass-through to domestic prices ; rising cost of transportation ; high cost of
energy and other production inputs ; lingering insecurity , especially in food -
producing areas; and legacy infrastructure deficits.
Data from the National Bureau of Statistics showed that real GDP grew by 3.46
per cent in the fourth quarter of 2023, compared with 2.54 per cent in the
previous quarter. Staff forecasts for 2024 indicate that the Nigerian economy
will grow by 3.38 per cent.
Disruptions to the global supply chain, associated with pockets of geopolitical
tensions continue to pose a key concern to monetary policy . Global inflation
has however, continued to decelerate in 2024 but is expected to remain above
the long -run objectives of major central banks. Interest rates of advanced
economy central banks are thus expected to remain high in the short to medium
term before commencing a descent. Consequently, global financial conditions
may remain tight through 2024.
MONETARY POLICY COMMUNIQUE NO.151
Accordingly, the Committee will continue to monitor developments in the global
and domestic economies to ensure that inflationary expectations are anchored
to restore and sustain macroeconomic stability.
All twelve members attended the meeting. The next MPC meeting will be held
on the 20th and 21st of May 2024.
Thank you.
Olayemi Cardoso
Governor,
26th March 2024