The Central Bank of Nigeria (CBN), has observed that the nation’s economy has maintained a positive growth trajectory for nine consecutive quarters since exiting recession in 2020, just as the apex bank increased the interest rate to 18 percent.
The CBN Governor, Mr Godwin Emefiele, announced these Tuesday in Abuja, while reading a communique issued at the end of the 290th meeting of the Monetary Policy Committee (MPC) meeting of the apex bank.
This is even as the committee also pegged the liquidity ratio at thirty percent, explaining that tightening of the rate is expected to curtail inflation currently put at twenty-one percent.
According to Emefiele, the improved performance of the economy has been driven largely by sustained growth in the services and agricultural sectors.
He also cited a rebound in economic activities associated with economic recovery and continued intervention in growth enhancing sectors by the CBN as responsible for the growth.
“The Committee, however, observed with concern, the marginal increase in headline inflation in February 2023, to 21.91 per cent, from 21.82
per cent in January 2023, a 0.09 percentage point increase.
“This increase was attributed largely to a minimal rise in the food component to 24.35 per cent in February 2023, from 24.32 per cent in January 2023.
“The core component moderated to 18.84 per cent in February 2023 from 19.16 per cent in January 2023,” he said.
Emefiele said that the shocks to the food component of inflation were driven by high cost of transportation of food items.
He said that lingering security challenges in major food-producing areas and legacy infrastructural problems, which continue to hamper food supply logistics were also responsible.
“Broad money supply (M3) grew by 13.14 per cent in February 2023, below the 2023 provisional annual benchmark of 17.18 per cent.
“This was driven largely by the growth in Net Foreign Assets (NFA), which was attributed to the increase in foreign asset holdings of the CBN and decrease in foreign claims on Other Depository Corporations (ODCs).
“Money market rates reflected the tight liquidity conditions in the banking system.
“Consequently, the monthly weighted average Open Buyback (OBB)
and Inter-bank Call rates increased to 12.74 and 12.54 per cents in February 2023, from 10.14 and 10.35 per cent in January 2023,” he said.
On naira redesign, Emefiele explained that the bank aligns itself with the Supreme Court’s judgement as currency in circulation (redesigned naira) is about one trillion naira.
He said that the bank will continue to pump more currency into the system but with caution.
The central bank boss expressed confidence in the nations commercial banks stating that they have remained resilient with capital requirement at thirteen percent, non performing loans at four point two percent and cash reserve of the banks raising to fourteen trillion naira.
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