By Elizabeth Adegbesan
Members of the Monetary Policy Committee, MPC, of the Central Bank of Nigeria, CBN, have recommended reduction in money supply growth to rebuild monetary buffers and boost the resilience of the economy against future shocks.
They also noted that control of money supply growth would prevent the recent increase in currency-in-circulation from fuelling inflationary pressures.
In his personal remarks contained in the Central Bank of Nigeria, CBN, Communique for the MPC meeting in May, a member and Deputy Governor, Corporate Services Directorate, CBN, Mr. Adamu Edward , said: “Growth in money supply is yet to be adequately curtailed, at least to the benchmarks for the year.
“Among other benefits, slowing the growth of money supply at this time should contribute to rebuilding monetary buffers to improve the economy’s resilience against future shocks.
“ It is in this context that despite posing a risk to inflation, I see the planned removal of subsidy on PMS as appropriate as it should significantly reduce the need for monetary accommodation going forward.” On his part, Mr. Momodu Omamegbe, a member, and Head of Strategy, Securities and Exchange Commission, SEC, said: “Meticulous management of the money supply is of paramount importance to forestall the recent increase in currency in circulation (CIC) from fuelling inflationary pressures.
“In essence, by remaining steadfast in its pursuit of inflation control, factoring in the lags in policy transmission, and implementing astute currency management strategies, the Bank can contribute significantly to the attainment of price stability, the stimulation of sustainable economic growth, and the preservation of the nation’s economic prosperity.”
The CBN, Money and Credit Statistics report for May 2023 showed that currency in circulation (CIC) rose MoM by 8.7 percent to N2.5 trillion from N2.3 trillion in May, maintaining an upward trend since March 2023 where it stood at N1.6 trillion.
Source: Vanguard