Inflationary Spike: MPC Raises Policy Rate To 18.75%, as DSS, Prison Officials Fight Over Emefiele’s Custody

Members of Nigeria’s central bank’s Monetary Policy Committee (MPC), on Tuesday concluded their meeting, the fourth for the year, with the majority of the 11 members voting to further hike the benchmark Monetary Policy Rate (MPR), albeit slower 25% from 18.5% to 18.75%.
The committee members voted unanimously, according to the communique issued at the end of the meeting, to “narrow the asymmetric corridor from +100/-700 to +100/-300 basis points around the MPR.”
At the end of the meeting chaired by Folashodun Shonubi, the Acting Governor, also agreed to retain Cash Reserve Ratio at 32.5%; and Liquidity Ratio at 30%
In arriving at the decision, and based on the outlook for the domestic economy, the communique said members “noted the need to continue to support investment which will ultimately lead to the recovery of output growth. The balance of these arguments thus, leaned in favour of a moderate rate hike, to sustain efforts at anchoring inflation expectation, narrow the negative real interest rate gap, and improve investor confidence.”
They reasoned “that the Committee was confronted with only two policy options, to hold or hike the policy rate to offset the moderate increase in headline inflation.
Considering the option to hold, the Committee reviewed the impact of the continued rise in inflation on various macroeconomic variables, noting the potential dampening effect on output growth.
“Members agreed unanimously that the previous series of rate hikes had indeed greatly moderated the pace of price increases,” the communique added, stressing that the “option to continue to hike the policy rate, albeit moderately, also presented a strong alternative.
“This is premised on the expected liquidity injections into the economy from the recent policy developments and the likely impact on inflation,” it stressed further.
The meeting also held incidentally on a day Godwin Emefiele, the CBN Governor, who was suspended last month from office and detained by the Department of State Security (DSS) for investigation appeared for the first time at the Federal High Court.
Emefiele pleaded not guilty to the two-count charge bordering on alleged illegal possession of firearms.
The court presided over by Justice Nicholas Oweibo granted the suspended CBN governor bail for N20m, with one surety in like sum, noting that the charges against Emefiele are bailable.
He was however seized shortly after by the DSS operatives who physically fought operatives of the Nigerian Correctional Services (NCS) who attempted to take him away in compliance with the order of the court.