July 12 (Lagos) - The CBN Governor blamed a spree of multi-trillion Naira loans taken by the immediate past administration for the current inflation monster the economy is facing.
In our opinion, he is not far from the point. Too much money chasing too few goods is the official definition of Inflation. The immediate past policies included artificially low interest rates which had a negative effect on economy as it contributed to Naira devaluation and also weakened the retail banking footprint as people were not incentivized to save. Now the CBN has had to sharply raise the rates and they are still far below where the inflation is at.
CBN Governor reminded everybody that the MPC decision is made by the Monetary policy Committee and not by himself. Smart analysts already deciphered what is about to come at the next MPC meeting in about 10 days from now.
The yield on the one year treasury bills was 21.24%, and is making consumers start saving in Nigeria again. This would lead to Naira demand and strength in the currency which is currently heading towards 1600 levels again. There are 3 MPC meetings left in 2024 so we could be approaching 30% levels in the short term to control inflation.
reporting for easykobo.com on Friday, July 12 2024 from Lagos, Nigeria