{"doc_id": "04b1f6362dc6fa7d01386e03257582d8", "text": "Central Bank of Nigeria \nPage 1 of 5 \n \nMONETARY POLICY COMMUNIQUE NO.153 \n \nDate: Tuesday, 23 July 2024 \n \nMONETARY POLICY RATE HIKED TO 26.75 PERCENT \n \nThe Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) \nheld its 296th meeting on the 22nd and 23rd of July 2024 to review recent \neconomic and financial developments as well as assess risks to the outlook. \nEleven members attended the meeting. \n \nDecisions of the MPC \nThe Committee’s decisions are as follows: \n1. Raise the MPR by 50 basis points to 26.75 per cent from 26.25 per cent. \n2. Adjust the asymmetric corridor around the MPR to +500/-100 from +100/-\n300 basis points. \n3. Retain the Cash Reserve Ratio of Deposit Money Banks at 45.00 per cent \nand Merchant Banks at 14 per cent. \n4. Retain the Liquidity Ratio at 30.00 per cent \n \nConsiderations \nThe Committee was mindful of the effect of rising prices on households and \nbusinesses and expressed its resolve to take necessary measures to bring \ninflation under control. It re-emphasized its commitment to the Bank’s price \nstability mandate and remained optimistic that despite the June 2024 uptick in \nheadline inflation, prices are expected to moderate in the near term. This is \nCentral Bank of Nigeria \nPage 2 of 5 \n \nMONETARY POLICY COMMUNIQUE NO.153 \nhinged on monetary policy gaining further traction, in addition to recent \nmeasures by the fiscal authority to address food inflation. \n \nIn its consideration, the Committee noted the persistence of food inflation, \nwhich continues to undermine price stability. It was observed that while \nmonetary policy has been moderating aggregate demand, rising food and \nenergy costs continue to exert upward pressure on price development. The \nprevailing insecurity in food producing areas and high cost of transportation of \nfarm produce are also contributing to this trend. Members were, therefore, not \noblivious to the urgent benefit of addressing these challenges as it will offer a \nsustainable solution to the persistent pressure on food prices. \nAlso noted in its consideration, is the increasing activities of middlemen who \noften finance smallholder farmers, aggregate, hoard and move farm produce \nacross the border to neighbouring countries. The Committee suggested the \nneed to put in check such activities in order to address the food supply deficit \nin the Nigerian market to moderate food prices. The MPC, therefore, resolved \nto sustain collaboration with the fiscal authority to ensure that inflationary \npressure is subdued. \nIn addition, the Committee expressed optimism with the recent stop gap \nmeasures by the Federal Government to bridge the food supply deficit. In \nparticular, the 150-day duty free import window for food commodities (maize, \nhusked brown rice, wheat and cowpeas), amongst others, will moderate \ndomestic food prices. It is noteworthy that these measures will not lead to direct \ninjection of liquidity into the economy as to cause further inflation. While the \nmeasure is a welcome development and may prove effective in the short run, \nit is expedient that it is implemented with a defined exit strategy to avert a \nCentral Bank of Nigeria \nPage 3 of 5 \n \nMONETARY POLICY COMMUNIQUE NO.153 \npossible rollback of the recent gains in domestic food production. To support \nthese initiatives, the Bank is already engaging Development Finance \ninstitutions like the Bank of Industry (BOI) to ensure adequate support to \nindustries with a focus on Small and Medium Scale Enterprises (SMEs). \nThe MPC noted the narrowing spread between the various foreign exchange \nsegments of the market, an indication of price discovery and improved market \nefficiency, thus reducing opportunities for arbitrage and speculation. The \nCommittee noted that the increase in the level of external reserves would \nfurther build confidence for a more stable exchange rate and thus urged the \nBank to explore available avenues to improve inflows, especially through \ndiaspora remittances. In addition, Members noted the efforts of the Federal \nGovernment and private sector towards improving domestic refining capacity \nas this is expected to reduce foreign exchange currently being expended on \nthe importation of refined petroleum products. \nThe MPC noted the sustained resilience of the banking system, reflected in \nimprovements of key financial soundness indicators (FSIs). Members further \nencouraged the continued need for close monitoring of the system, as the \nimplementation of the recapitalization exercise progresses. \nTo consolidate on the gains thus far achieved, the Committee re-emphasized \nits commitment to stay on course with its tightening cycle in view of the urgent \nneed to address inflationary pressures. \n \nKey Developments in the Domestic and Global Economies \nCentral Bank of Nigeria \nPage 4 of 5 \n \nMONETARY POLICY COMMUNIQUE NO.153 \nAccording to the National Bureau of Statistics, domestic headline inflation rose \nmarginally to 34.19 per cent in June 2024 from 33.95 per cent in May 2024, \ndriven by the continued rise in the year-on-year components of food and core \ninflation. Similarly, month-on-month headline inflation rose to 2.31 per cent in \nJune 2024, from 2.14 per cent in the preceding month. The food and core \ncomponents rose to 2.55 and 2.06 per cent in June 2024 from 2.28 and 2.01 \nper cent in May, respectively. \n \nReal GDP (year-on-year) grew by 2.98 per cent in the first quarter of 2024, \ncompared with 3.46 per cent in the fourth quarter of 2023, driven by both the \noil and non-oil sectors. Staff forecasts, however, suggest that the domestic \neconomy will grow by 3.38 per cent in 2024, while the IMF has projected growth \nat 3.1 per cent in 2024. \nAs of July 18, 2024, external reserves stood at US$37.05 billion, compared \nwith US$34.70 billion as at end-June 2024. This represents eleven (11) months \nof import cover for goods and services. \nThe global economy, according to the IMF, is forecast to grow at 3.2 and 3.3 \nper cent in 2024 and 2025, respectively. Headwinds to the global projection \nremain the tight global financial conditions and ongoing geopolitical tensions \nassociated with the wars in Gaza and Ukraine, both of which have significant \nimpact on commodity prices and the global supply chain. \nGlobal inflation is forecast to continue to decelerate marginally in 2024 but may \nstay above the long-run objectives of most advanced economy central banks. \nGlobal financial conditions may, therefore, remain broadly tight through 2024 \nand into 2025. \nCentral Bank of Nigeria \nPage 5 of 5 \n \nMONETARY POLICY COMMUNIQUE NO.153 \nThe Committee reaffirmed its commitment to continue to monitor developments \nin the global and domestic economies to guide policy and ensure that inflation \nexpectations are adequately anchored. \nThe next meeting of the Committee will be held on the 23rd and 24th of \nSeptember 2024. \nThank you. \nOlayemi Cardoso \nGovernor, \nCentral Bank of Nigeria \n23rd July 2024", "source": "CBN", "stratum": "cb_requests", "fetch_date": "2026-05-11", "url": "file:///CBN/MPC_Communiques/Central Bank of Nigeria Communique No.153 of the 296th Meeting of Monetary Policy Committee held on Tuesday, 23rd July, 2024.pdf"}