Our monetary transmission mechanism is improving but is yet to reach robust standards. It remains impeded because of administered interest rates, the asymmetric contractual relationship between banks and their depositors, illiquid bond markets and large government borrowings. These impediments to monetary transmission diminish our effectiveness as inflation targetters.
Our repurchase (repo) rate currently stands at 7.75%, representing a cumulative increase of 425 basis points since we began raising rates in November 2021, compared to the policy easing of 300 basis points in 2020 in response to the pandemic. Our inflation rate is 7.0% at present, or 5.2% when excluding food, petrol and energy.