SIGNIFICANT injection of N1.3 trillion by the Federation Accounts Allocation Committee (FAAC) and the estimated N1.6 trillion intervention of AMCON in rescued banks have forced the Central Bank of Nigeria (CBN) to, once again, tighten the monetary policy, to curtail the inflationary pressure arising from such huge injections.
Governor of the CBN, Mallam Lamido Sanusi, while addressing the media in Abuja, on Tuesday, shortly after the 77th meeting of the Monetary Policy Committee (MPC) held at the apex bank corporate headquarters, said the committee welcomed the favourable growth projections, but cautioned that the security challenges, infrastructural bottlenecks and the uncertainty in the international economy and the fiscal developments could undermine investors’ confidence and output growth in the near term.
In view of the need to proactively address the impact of the huge liquidity injection and correct the negative real interest rate situation in the market and attract foreign capital inflows to build up reserves to protect the economy against external shocks, Mallam Sanusi said the MPC decided to tighten monetary policy by a majority decision of 10 to two and raise the Monetary Policy Rate (MPR) from 8 per cent to 8.75 per cent by a majority vote of eight members in its favour.
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