At the conclusion of the 296th MPC meeting in Abuja on Tuesday, CBN Governor Olayemi Cardoso announced an increase in the Monetary Policy Rate.
Since it began holding meetings this year, the MPC has been aggressive in its efforts to control inflation, raising rates by more than 500 basis points so far.
In May, the rate was increased to 26.25 percent.
However, the headline inflation rate climbed by 0.24 percent compared to the May 2024 headline inflation rate of 33.95 percent, with inflation rising to 34.19 percent in June, as reported by the National Bureau of Statistics.
The headline inflation rate was 11.40 percentage points higher in June 2023 (22.79 percent) compared to the previous year.
Additionally, the headline inflation rate for June 2024 was 2.31 percent, which was 0.17 percent higher than the rate for May 2024 (2.14 percent). This indicates that the average price level increased at a faster rate in June than it did in May
The governor of the CBN has often asserted that the MPC members were prepared to continue tightening until inflation was controlled and that they were dedicated to maintaining price stability.
Investment houses have predicted in multiple publications that the MPR would increase.
According to Cowry Asset Management’s weekly forecast, interest rates will rise by 25 basis points to 50 basis points. Meanwhile, the Meristem study predicts that the monetary policy rate will increase by 100 basis points to 27.25 percent while other factors remain unchanged.
In general, we believe that the committee will give priority to sustainable capital inflow and inflation control, both of which are essential for preserving a stable exchange rate system. In order to accomplish these goals, the committee may decide to raise interest rates.
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