The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) unanimously voted to increase the Monetary Policy Rate (MPR) further by 100bps to 16.5% the fourth consecutive rate hike and the highest rate since November 2002 (18.5%). The hike brings the cumulative interest rate increase in 2022 to 500bps.
The last time the MPR was at the 16.5% level was in July 2003. Based on the voting pattern, nine members voted to increase the MPR by 100bps, while the remaining two members voted for a 50bps hike in the MPR.
Also, the Committee voted to retain the asymmetric corridor around the MPR at +100bps/-700bps, Cash Reserve Requirement (CRR) at 32.5%, and Liquidity ratio at 30.0%.
On domestic growth: The MPC noted the consistent positive performance since the exit from the COVID-19-induced recession, driven by the non-oil sector and complemented by continued policy support from the fiscal and monetary authorities.
Moreover, the Committee expects continued output growth for the rest of 2022, albeit at a much slower pace than earlier anticipated, in light of the domestic and external shocks to the economy.
On Inflation: The Committee remained concerned about the continued uptick in inflationary pressures for the ninth consecutive month, with the headline inflation settling at 21.09% y/y in October.
However, the Committee noted the slowdown in the m/m inflation (-11bps to 1.24% m/m as of October), indicating that price pressures are responding to the CBN’s recent interest rate hikes.
