The Central Bank of Nigeria has stated that it will implement aggressive cash reserve requirement “CRR” measures by mopping up liquidity from commercial banks by Thursday latest.
He warned banks to fund their accounts immediately.
This was revealed by CBN Governor Godwin Emefiele as he briefed the media following the end of the monetary policy committee meeting.
The Governor also explained that banks that fail to fund their bank accounts will be denied access to the foreign exchange market.
The apex bank believes increased liquidity is one of the major reasons why the exchange rate has been depreciating.
The MPC voted to increase interest rates to a whopping 15.5% as the apex bank battles rising inflation amidst a fiscal crisis.
The Central Bank during its last MPC meeting had increased the interest rate from 11.5% to 14% in the last two meetings, however with the inflation rate still spiking above 20%, the CBN has raised the rate further to 15.5% in a bid to combat the rising cost of goods and services.
Nairametrics opinion analysts “Blurb” correctly predicted last week that the apex bank will increase rates to record levels after the last rate hike failed to slow down the pace of the inflation rate in the country.
I don’t see these rate increases showing down inflation in Nigeria. Rate increases work more in debt driven economies the Western world where people purchase stuff on credit such as houses, cars, gadgets, clothes, etc through credit cards, direct loans, mortgages etc. Higher rates mean they slow down on these purchases which reduces demand in light of stable supply. Prices then have to come down for stock to be sold.
In Nigeria or inflation is mainly from naira devaluation, high transport costs due to expensive diesel and food shortages caused by insecurity up north.
None of these 3 things is related to interest rates as it relates to consumer expenditure patterns. People have to eat whether food is more expensive or not.
Inflation in all sectors caused by weakening of naira everyday day by wrong policies of Central Bank of nig by so called leaders who have a meagre or no sense to rule the country which one time was an African giant now inhabited by poor ppl except filthy rich leaders,govt officials and their daily practice how to siphon ppl funds and make Nigeria bankrupt and culprits are FIRS,CUSTOMS,IMMIGRATIONS AND POLICE.
This was very nice though it was difficult to understand