CBN to Pull Out N1 Trillion from Circulation to Stabilize Economy (By Akinrinde, Ibukunoluwa Jeremiah)

In its efforts to stabilize the economy, the CBN embarked on monetary tightening to withdraw up to N1 trillion from circulation. Last week the CBN’s liquidity mop-up was N525 billion; while N219 billion is to be withdrawn from the economy next week and treasury plans are being made to sell N300 billion worth of treasury securities sometimes latter. Also, at the last MPC meeting, the MPR was reviewed upward from 11% to 12%, alongside the CRR from 20% to 22.5%.

However, the instability of the economy, specifically inflation, was not driven by demand pull factors but cost push factors. Hence, addressing the cost push factors (imported inflation, fuel scarcity etc.) and forex easing are expected to be the way out.

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