Buttressing his argument, he said, “In the UK they have a denomination in 50 pounds but the most spent denomination is 20 pounds. Nobody spends 50 pounds. If you go around carrying 50 pounds in the UK they will suspect sic report you in fact.”
And then compared this with Nigeria…“The reverse is what is happening in here. Nigerians want to carry N500 and N1000. And in fact, we are beginning to think that increasing the high denomination is also part of what is fueling inflation. So in fact, yes we will launch N200, N500, and N1000, over time, we will reduce the volume of N500 and N1000 in circulation. Let people carry N50 around. “
electronic banking is the answer.
But the committee also retained the +100 and-100 asymmetric rates around the benchmark interest rate.
The Cash Reserves Ratio (CRR) and Liquidity Ratio (LR) are retained at 32.5 percent and 30 percent respectively.
Specifically, he attributed the hike to the fear that spending during the forthcoming festive period, Christmas, could further push the inflation rate and erode the gains from the previous tightening measures.
The analysts also agreed that at 21.09 percent, inflation is already hurting growth and coupled with the other natural disasters, CBN will have to take some proactive measures.
“With a rise in inflation, loosening the stance of policy will lead to a more aggressive rise in inflation and will erode that gain already achieved through tightening as regards whether to hold MPC was of the view that they won’t stand at the period close to December festive and expected heavy spending during 2023 general election,”.
“MPC decided to continue to tighten, but at a somewhat more moderated rate, noting that tightening the stance of policy would narrow the negative real effective interest rate margin and force to improve market sentiment and further restore investors confidence.”