The Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC) raised the Monetary Policy Rate (MPR) by 50 basis points to 26.75% at its July meeting, aiming to curb inflationary pressures and ensure price stability.

This increase marks the slowest hike this year, as the MPC anticipates a near-term disinflation trend.

The Committee also tightened the asymmetric corridor around the MPR and maintained other parameters, including the Cash Reserve Requirement (CRR) and liquidity ratio.

The MPC acknowledged slow but positive GDP growth in Q1-24, driven by moderate growth in the oil and non-oil sectors, and upheld its 2024E GDP forecast of 3.38% y/y.

On inflation, the Committee noted the rise to 34.19% y/y in June, driven by exchange rate pass-through, higher food prices, and energy and transportation costs.

However, they expect disinflation in the coming months due to tight monetary policy.

Regarding foreign exchange, the MPC noted the narrowing gap between exchange rates across different market segments, signaling better price discovery and enhanced market efficiency.

They commended the CBN’s efforts to strengthen FX reserves and encouraged initiatives to boost inflows, particularly through diaspora remittances.