PANAPRESS
Panafrican News Agency
'Inflation is on downward trend in Nigeria'
Nairobi, Kenya (PANA) - Inflation in Nigeria is on a downward trend as a result of the coordinated efforts to maintain price stability, according to the Governor of the Central Bank of Nigeria (CBN), .Mr, Sanusi Lamido Sanusi.
Addressing Governors of Central Bank from the East African region here, on the measures taken to control inflation in Nigeria, Mr. Sanusi said the management of inflation in Nigeria over the years had been challenging, due to the monetarization of crude oil receipts, dwindling external reserves and the demand-pull pressures of food, which drive trends in inflation.
He said, however, that the CBN did not intervene directly in the market after January's removal of state subsidy on petrol because adequate measures had been taken earlier by the bank’s top policy-making organ.
“In anticipation of government action and events, the Monetary Policy Committee (MPC) usually takes preemptive actions prior to the event taking place,” Sanusi said.
A nation-wide strike declared by Nigeria's umbrella labour unions to protest the subsidy removal, which sharply hiked fuel prices, shut down Africa's second largest economy for six days and left many dead in clashes with police.
To deal with a looming inflationary crisis, the CBN Governor said efforts implemented earlier targeted funds and reserves held by commercial banks and a liquidity tightening.
He said lending rates rose from 6% in 2010 to 12% in October 2011, the height of the depreciation of the local currency, the naira, against the US dollar and other currencies.
A policy of maintaining the current plus or minus 200 basis points around the Monetary Policy Rate, the Cash Reserve Ratio (CRR) - a measure of cash retained by the banks on customers deposits - was increased from 2% in 2010 to 8% in 2011.
The CBN is also enforcing a policy of tightening the exchange rate band of plus or minus 3%, while insisting on a gradual move in the monetary policy.
-0- PANA AO/SEG 16Feb2012
Addressing Governors of Central Bank from the East African region here, on the measures taken to control inflation in Nigeria, Mr. Sanusi said the management of inflation in Nigeria over the years had been challenging, due to the monetarization of crude oil receipts, dwindling external reserves and the demand-pull pressures of food, which drive trends in inflation.
He said, however, that the CBN did not intervene directly in the market after January's removal of state subsidy on petrol because adequate measures had been taken earlier by the bank’s top policy-making organ.
“In anticipation of government action and events, the Monetary Policy Committee (MPC) usually takes preemptive actions prior to the event taking place,” Sanusi said.
A nation-wide strike declared by Nigeria's umbrella labour unions to protest the subsidy removal, which sharply hiked fuel prices, shut down Africa's second largest economy for six days and left many dead in clashes with police.
To deal with a looming inflationary crisis, the CBN Governor said efforts implemented earlier targeted funds and reserves held by commercial banks and a liquidity tightening.
He said lending rates rose from 6% in 2010 to 12% in October 2011, the height of the depreciation of the local currency, the naira, against the US dollar and other currencies.
A policy of maintaining the current plus or minus 200 basis points around the Monetary Policy Rate, the Cash Reserve Ratio (CRR) - a measure of cash retained by the banks on customers deposits - was increased from 2% in 2010 to 8% in 2011.
The CBN is also enforcing a policy of tightening the exchange rate band of plus or minus 3%, while insisting on a gradual move in the monetary policy.
-0- PANA AO/SEG 16Feb2012
