The Monetary Policy Committee of the Central Bank of Nigeria (CBN) retained the Monetary Policy Rate (MPR) at 11.5 percent during its 281st meeting 1. Similarly, other monetary parameters were kept constant including the Cash Reserve Ratio at 27.5 percent and the Liquidity Ratio at 30 percent. The rates were retained largely as a result of the declining rate of inflation and the improvement in the growth rate of Gross Domestic Product. The continuous double digit MPR may however limit the availability of funds to the private sector, which is required to spur aggregate supply in order to achieve lower levels of inflation. This is underpinned by the fact that inflation in Nigeria is recognised to be mainly cost push rather than demand pull, and as such cannot be solely contained by monetary policy. Going forward, programmes to address structural factors that continue to exert upward pressure on prices should be integrated with ongoing monetary policy interventions.
