By Abidemi Samuel
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The Central Bank of Nigeria (CBN) has taken a bold step to curb the rising inflation rate in the country by increasing the interest rate by 25 basis points to 27.5%. This decision was made during the 298th Monetary Policy Committee (MPC) meeting held in Abuja, where members unanimously voted to raise the monetary policy rate to combat inflation.
The interest rate hike is aimed at addressing the persistence in price pressures, which has led to a significant increase in Nigeria’s headline, food, and core inflation measures. The inflation rate rose to 33.88% year-on-year in October 2024, indicating a persistence in price pressures with adverse impacts on income and welfare of citizens.
The CBN has also announced a non-resident account programme for Nigerians in the diaspora, designed to aid diaspora remittances, which currently stand at over $600 million. The programme, set to kick off in December, aims to make it seamless for Nigerians in the diaspora to open accounts and conduct business in Nigeria.
The external reserves of the central bank rose marginally to $40.88 billion as of November 21, 2024, from $40.06 billion at the end of October 2024. The reserves are available to finance 17 months of imports. The CBN governor emphasized the need for Nigerians to reduce their appetite for foreign products and patronize locally made ones to help reduce the pressure on the Naira, which currently exchanges for N1.734 to $1.
Reacting to the reported issue of cash shortage in the country ahead of the yuletide season, the CBN governor assured that the apex bank has supplied enough banknotes to each of the deposit money banks according to their capacity. He warned that anyone found hoarding banknotes during the Christmas season would be sanctioned accordingly.
The CBN governor expressed optimism that Nigeria will exit the Grey List by the second quarter of 2025. Nigeria was placed on the Grey List by the Financial Action Task Force (FATF) on February 24, 2023, along with South Africa. The governor acknowledged that Nigeria’s continued stay on the grey list is a disservice and a discouragement to Nigerians in the diaspora who would have wanted to use legitimate channels to repatriate their funds.
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