LAGOS, July 27 (Xinhua) -- Nigeria on Tuesday hiked the Monetary Policy Rate by 200 basis points from 12 percent to 14 percent to combat inflation and stimulate growth, an official said.
Godwin Emefiele, Nigeria's apex bank chief who announced the decision of the Monetary Policy Committee after a two-day meeting in Abuja, said eight out of the 12-member committee attended the meeting.
The Central Bank of Nigeria (CBN) Governor told reporters that out of the eight, five members voted in favor of monetary tightening, while the remaining three members voted to hold the rate at 12 percent.
He said the committee, however, left the Cash Reserve Ratio and the Liquidity Ratio unchanged at 22.5 percent and 30 percent respectively.
The MPR is the anchor rate at which the CBN, in performing its role as lender of last resort, lends to Deposit Money Banks to boost the level of liquidity in the banking system.
In taking the decision to increase MPR, Emefiele said the committee was faced with two policy choices whether to hold or reduce the rate to stimulate growth or increase the MPR in order to curb inflation.
He said considering that the primary mandate of the CBN was to maintain price stability, the committee had decided to focus on its mandate by checking inflationary pressures.
The governor added that members of the committee were concerned about headline inflation which spiked significantly in June, approaching twice the size of the upper limit of the policy reference band.
The committee, according to the governor, noted that inflation had risen significantly, eroding real purchasing power of fixed income earners and dragging growth.
