The Central Bank of Nigeria, CBN, is pointing accusing fingers at the people it called the middlemen who provide financial support to farmers for being responsible for the rising food prices in the country. Mr. Oluyemi Cardoso, governor of CBN said this in Abuja after the meeting of the Monetary Policy Committee, MPC on Tuesday.
According to him, “It was observed that while monetary policy has been moderating aggregate demand, rising food and energy costs continue to exert upward pressure on price development. The prevailing insecurities in food producing areas and high cost potential of farm produce are also contributing to this trend.” Then, he pointedly accused those who are believed to be assisting the government of helping to bring about the promised massive food production.
His words: “The increasing activities of middlemen, who often finance smallholder farmers, obligate, hoard and move farm produce across the border to neighbouring countries.” The committee decided it would not allow them to continue to hold everyone to ransom, he said, “The committee suggested they need to put in check such activities in order to address the food supply deficit in the Nigerian market to moderate food prices. The MPC therefore resolved to sustain collaboration with the fiscal authority to ensure that inflationary pressure is subdued.”
That was not the only issue the Committee deliberated upon at that meeting. It also increased the Monetary Policy Rate by 50 basis points to 27.65 per cent in another move to contain inflation.
At the previous meeting held in May, the CBN raised the MPR by 150 basis points to 26.25 per cent from 24.75 per cent, which it was in the previous months.
Before the latest hike, the central bank had increased benchmark interest rates seven times from 17.5 per cent in January 2023 to 26.25 per cent.
Despite the MPR raise, the country’s inflation has failed to moderate as the National Bureau of Statistics measured inflation at 33.25 per cent in June.
Food inflation rose to an all-time-high of 40.8 per cent in June.
Revealing the decision, the CBN Governor, Olayemi Cardoso said 11 members attended the meeting and they concluded to raise the “MPR by 50 basis points to 27.65 per cent from 26.25 per cent.
“Adjust the asymmetric corridor around the MPR from plus 100 to minus 300, to plus 500 to minus 100 basic these points. Retain the cash reserve ratio of deposit money banks at 45 percent and merchant banks at 14 percent.
“Retain the liquidity ratio at 30 percent.”
He said the considerations were backed by rising prices on households and businesses and expressed its resolve to take necessary measures to bring inflation down.
Cardoso said the Committee “Re-emphasized its commitment to the bank’s price stability mandate and remained optimistic that despite the June 2024 uptick in headline inflation, prices are expected to moderate in the near term.”