January 27, 2023

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Inflation: CBN raises MPR, to cut back quantity of N500, N1000 in circulation


The Central Financial institution of Nigeria (CNN) in a ultimate bid to battle inflation charges for 2022 on Tuesday raised rates of interest to 16.5 per cent.

Whereas studying the communique of the final Financial Coverage Committee (MPC) assembly of the 12 months on Tuesday, CBN governor, Godwin Emefiele mentioned MPC members voted to extend the benchmark rate of interest (MPR) by 100 foundation factors to 16.5 per cent, the best degree since 2001.

Through the assembly, the MPC famous that the tightening will assist restore traders’ confidence while curbing increased fee of inflation.

Equally, the Committee the uneven hall of +100/-700 foundation factors across the MPR was retained, and CRR was retained at 32.5 per cent, whereas the Liquidity Ratio was additionally saved at 30 per cent.

Recall, that the apex financial institution had elevated the MPR from 11.5 per cent earlier this 12 months to fifteen.5 per cent throughout three consecutive fee hikes.

Nigeria’s inflation fee rose to 21.09 per cent in October 2022 from 20.77 per cent recorded within the earlier month, a sign of an extra rise in the price of items and providers, regardless of the hawkish transfer by the CBN prior to now six months.

Additionally as a part of efforts to curb rising inflation, the CBN additionally introduced plans to cut back the quantity of N500 and N1000 notes in circulation “over time”.

Emefiele claimed the hassle is geared toward curbing the inflation fee which he partly blamed on the higher-denominated naira notes.

He began by utilizing the UK for instance; “Within the UK they’ve a denomination of fifty kilos however probably the most spent denomination is 20 kilos. No person spends 50 kilos. In the event you go round carrying 50 kilos within the UK they may suspect you in reality.”

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After which in contrast this with Nigeria…“The reverse is what is occurring in Nigeria. Nigerians wish to carry N500 and N1000. And actually, we’re starting to assume that growing the excessive denomination can be half of what’s fueling inflation. So in reality, sure we’ll launch N200, N500, and N1000 over time we’ll scale back the quantity of N500 and N100o in circulation. Let individuals carry N50 round. “

“If you wish to do high-value transactions, embrace on-line, embrace our company programme and embrace our cell banking programme that’s what you want”