The monetary policy committee (MPC) of the Central Bank of Nigeria (CBN) yesterday raised the monetary policy rate (MPR) from 18.5 per cent to a ‘moderate’ 18.75 per cent for the first time since President Bola Tinubu was inaugurated on May 29, 2023.
The acting governor of the apex bank, Mr. Folashodun Shonubi, announced disclosed this to journalists after the MPC’s meeting at the CBN headquarters in Abuja.
Shonubi said the committee members voted to hike the rate by 25 basis points to 18.75 per cent, adjust the asymmetric corridor to +100 and -300 basis points around the MPR, retain the cash reserve ratio (CRR) at 32.5 percent and liquidity ratio at 30 per cent.
He said the moderate rate hike is to sustain efforts at anchoring inflation expectations, narrow the negative real interest rate gap and improve investor confidence.
Shobubi also said members agreed unanimously that the previous rate hikes have been effective in moderating the rate of price increases.
The governor also announced that plans were afoot to gradually phase out the old N200, N500, and N1,000 naira notes are ongoing, as new notes are still being issued.
Recall that the suspended CBN governor, Mr Godwin Emefiele, had in October 2022, unveiled plans to redesign the N200, N500, and N1, 000 naira bills.
He asked Nigerians to deposit their old notes before January 31, 2023, as they would cease to be legal tender after that date. However, later on, the CBN disclosed that the former president, Muhammadu Buhari, had approved an extension of the deadline for the demonetisation of the old notes.
But in March 2023, the Supreme Court annulled the naira redesign policy and ruled that the old N200, N500, and N1,000 notes would remain as legal tender until December 31, 2023.
Giving updates on the demonetisation policy, Shonubi said the old notes would “slowly, and overtime be replaced”.
He said the old notes were being exchanged for the new ones whenever it was being requested by the commercial banks.
“When a currency is printed and sent out. It is expected that it will go through a number of cycles, and then over time, will become one and then be replaced. That’s what we’re doing.
“We had to put out or re-put out old notes. And as they’re coming in, they’re being processed and returned to us as not issuable. We are then bringing out and replacing them with the new notes.
“We believe that we have an optimal level of the currency out there and so much of what’s being done is replacement to keep the level, rather than just putting money out there.
“And that is seen by the fact that the banks, whenever they come to us for notes, we provide it to them. If it wasn’t enough, they will be asking us for more. If it was too much, they’ll be dumping that much more on us.
“So, we will slowly, and over time you will see the old notes replaced out of the system with the new notes that’ll be the norm.
“This will be out of practice, not fanfare, you’ll just see it slowly morph from old to new,” he said.
