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February 27, 2024

‘Correct move’ —  Moghalu backs Cardoso on CBN’s 22.5 % interest rate benchmark

Moghalu

Professor Kingsley Moghalu

A former Deputy Governor, Central Bank of Nigeria, Kingsley Moghalu has commended the CBN for raising the Monetary Policy Rate (MPR) by four hundred basis points to 22.75 percent from 18.75 percent.

Moghalu gave this commendation in a statement via his Twitter handle on Tuesday.

He stated, “Correct move by @cenbank Monetary Policy Committee to dramatically hike the Monetary Policy Rate by 400 basis point to 22.5 %. The situation calls for nothing less if we are to check inflation over 12-18 months. We did the same a decade ago to bring inflation from 14% to 8%.

“It will hit businesses hard, but inflation is hitting harder. We must slay the inflation dragon lest it consume our economy and we head to Zimbabwe/Venezuela. The money supply MUST be reduced. Price stability must take priority before economic growth in the current situation,” he added.

Recall that the CBN raised its benchmark interest rate, the Monetary Policy Rate MPR to 22.75 per cent.

This represents 400 basis points from the current 18.75 percent.

Cardoso disclosed this at the end of the Monetary Policy Committee, MPC meeting held in Abuja today.

In 2023, Nigeria’s MPC implemented a strategy of gradually increasing the MPR over four consecutive meetings.

Other important indices, such the Cash Reserves Ratio (CRR) and Liquidity Ratio, stayed constant throughout the time despite these aggressive efforts, with the CRR remaining at 32.5 percent and the Liquidity Ratio at 30.0 percent.

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