Nigeria’s money supply growth decreased to 1.2% in February from 17.77% in January as a result of Central Bank of Nigeria tightening of liquidity.
Since Olayemi Cardoso entered office, the CBN has issued N1.5 trillion in Open Market Operation bills in an effort to fight inflation and strenghten the naira.
Due to the Federal Government actions, analysts estimate that the banking industry will lose N5 trillion, since the Central Bank of Nigeria increased the cash reserve ratio (CRR) of banks to 45%.
It appears that the CBN is sincere about the level of money supply in the economy by putting a halt to the money printing that caused inflation and debt to skyrocket.
But there’s also the financial aspect of the things, like the FAAC allocation, which has gone up from where it was in the last administration.
Beyond the purview of the CBN, the fiscal side must also be the emphasis for a sustainable course.
In February, money supply increased by 2%, while in January, it increased by 18.2%.
From N3.65 trillion in January 2024 to N3.69 trillion in February 2024, the amount of money in circulation increased by 1.09%.
In anticipation of another rate hike at the conclusion of their meeting, the Monetary Policy Committee (MPC) unanimously raised the monetary policy rate by 400 points to 22.75% last month.
In terms of what the retail banks are doing, money supply in the economy has been steady since last month.
POS operators are no longer charging extravagantly and banks have issuing the naira notes to their customers.
