The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has raised the country’s baseline lending rate by 150 basis points to 26.25 per cent.
The CBN governor, Olayemi Cardoso said this on Tuesday in Abuja while reading the communique from the 295th meeting of the MPC.
This is the third consecutive tightening of the lending rate, known as the Monetary Policy Rate (MPR), by the MPC under Mr Cardoso.
The raise came despite some financial and economic experts advising the MPC to retain the lending rate of 24.75 per cent.
A renowned economist, Ken Ife, said the seeming success of aggressive tightening in the last two meetings might propel the committee to tighten the rates further. However, Ife, the lead consultant on Private Sector Development to the ECOWAS Commission, advised the committee to retain the prevailing rates.
“They might want to increase it. The worst-case scenario is for them to retain it. This is because the policy is working to tighten the grip on inflation. It is actually yielding results. Even though, relative to last year, inflation is increasing, when you look at month-on-month inflation, all the five inflation indices are decreasing.
“Headline inflation, which is the composite price index, food basket index, core inflation, urban inflation, and rural inflation. They all went up in the last 12 months, but month on month, between March and April, they all started going down.
“So, the aggressive tightening is working, but it needs more time for the growth to become significant and reflect on the next months.” he said.
