CBN Groans as Election Spending Drives up Inflation

After the September Monetary Policy Committee (MPC) meeting in Abuja Tuesday, the Central Bank of Nigeria (CBN) expressed worry over rising election spending, which, according to it, is impacting negatively on inflation.

The apex bank also noted that reversal of Nigeria’s inflation that trended downwards for 18 consecutive months is also responsible for holding interest rate at 14 per cent along other parameters.

Reading the communiqué to newsmen after the MPC meeting, CBN Governor Godwin Emefiele said a “decision to hold all policy parameters constant would sustain gradual improvements in output growth, maintain the current monetary policy stance and await a clearer understanding of the quantum and timing of liquidity injections into the economy before deciding on possible adjustments.”

In summary, the MPC voted to retain the MPR at 14 per cent; retain the asymmetric corridor of +200/-500 basis points around the MPR; retain the CRR at 22.5 per cent; and retain the Liquidity Ratio at 30 percent.

CBN observed that “inflation outlook suggested a mild resurgence of inflationary pressure in the economy, traceable largely to cost-push factors, election related spending, amongst other domestic factors.”

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