The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) on Tuesday, unanimously voted to increase the Monetary Policy Rate (MPR) further by 100bps to 17.5% at its first meeting of 2023.
Representing the fifth consecutive rate hike since the CBN commenced its monetary policy tightening cycle in May 2022.
The voting pattern suggests the MPC could be less hawkish at subsequent meetings, as seven members voted to increase the MPR by 100bps, four members voted for a 50bps increase, and the remaining one member voted to increase the MPR by 150bps.
Also, the Committee voted to maintain other policy parameters at current levels; 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 did not acknowledge the slow growth in Q3-22 but attributed the consistently positive growth for the eighth consecutive quarter to the enhanced support by the fiscal and monetary authorities to growth-aiding sectors.
On the outlook, the Committee expects the domestic economy to continue to grow in 2023, but at a subdued pace, with the CBN projecting the economy to grow by 2.88% in 2023E.
On Inflation: Unsurprisingly, the Committee welcomed the moderation in consumer prices following ten consecutive months of increase as headline inflation moderated by 12bps to 21.34% y/y in December 2022.
However, the Committee was concerned about the monthly price increase due to the rise in consumer spending during the festive period.