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Thursday, December 8, 2022

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Inflation In Nigeria: Bank Hikes Rate To Highest Level

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Africa is currently witnessing rise in prices of essential commodities that has made economic conditions harsher for the people.

Prices of food commodities like bread, cereals, potatoes, yam, protein etc have gone up even in rural areas. Prices of housing, water, electricity, and gas have also been affected.

The primary lending rate of Nigeria’s central bank was increased by 150 basis points to 15.50% (NGCBIR=ECI), its highest level to date on Tuesday. The country is continuing its aggressive efforts to control inflation and relieve pressure on the naira.

According to the Consumer Price Index report by National Bureau of Statistics released last week, prices for products and services in Nigeria have increased sharply. This is the highest level in 17 years in August as inflation increased to 22.5%. Godwin Emefiele, Governor of Nigeria’s Central Bank reasoned that an aggressive stance was imperative for the Monetary Policy Committee.

Annual inflation rose for a seventh straight month in August to 20.52% from 19.64% in July.

“The MPC noted that a tight policy stance would help consolidate the impact of the last two policy rate hikes, which is already reflected in the slowing growth rate of money supply,” Emefiele told a news conference. He raised the cash reserve minimums for banks in an effort to drain market liquidity and end currency speculation. Banks that don’t increase their reserves will be prohibited from trading in the foreign exchange market starting on Friday, he said.

This week, according to merchants, the value of the naira fell to a new low of 725 versus the dollar on the black market and ranged between 415 and 435 on the official market.

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