The U.S. Federal Reserve has raised interest rates by another 75 basis points following a 25 basis points increase in March to curtail the rising inflation rate and rein in escalating prices.
U.S. inflation rate rose to 8.6% in May, its highest in 40 years. The increase was a result of global uncertainty caused by Russia’s invasion of Ukraine and the supply disruption caused by the Covid-19 lockdown in China, the Fed stated in its press release obtained by Investors King.
The Fed, however, said the economy has rebounded from the first quarter decline with new job creation on the rise and the unemployment rate low. But noted that the increase in inflation rate in recent months was due to ‘supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures.’
However, because the committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run, it agreed to raise the federal funds rate to 1‑1/2 to 1-3/4 percent and anticipates that ongoing increases in the target range will be appropriate.
The committee further stated it will continue to reduce its holdings of Treasury securities and agency debt and agency mortgage-backed securities as described in the Plans for Reducing the Size of the Federal Reserve’s Balance Sheet that was issued in May.
“Clearly, today’s 75 basis point increase is an unusually large one, and I do not expect moves of this size to be common,” Powell said. He added, though, that he expects the July meeting to see an increase of 50 or 75 basis points. He said decisions will be made “meeting by meeting” and the Fed will “continue to communicate our intentions as clearly as we can.”
“We want to see progress. Inflation can’t go down until it flattens out,” Powell said. “If we don’t see progress … that could cause us to react. Soon enough, we will be seeing some progress.”
Fuel Scarcity: Car Owners Abandon Vehicles as Nigerian Masses Stage Protest
As the fuel scarcity bites harder across the country, vehicle owners have been abandoning their vehicles and opting for public transportation.
Investors King reports that some other Nigerians, especially civil servants have resigned to fate by trekking to work while others who could afford skyrocketing transport fares were moving around in public vehicles.
Findings across some states revealed that a litre of Premium Motor Spirit, popularly known as petrol, was being sold between N280 and N350.
This came as downstream petrol marketers have blamed the Nigerian National Petroleum Commission (NNPC) for only selling the petroleum products for private depots owners and ignoring retailers whose numerical strength outweighs that of the major marketers.
The scarcity is worsened because most filling stations were not operating while the few that are selling the product are struck with long queues, fighting and bribery.
At various Government Secretariats and other offices checked by Investors King, it was observed that the parking spaces were not filled with vehicles as it was usually done.
A civil servant who did not want his name mentioned lamented the fuel scarcity and hike in fuel price saying, “I have no choice than to keep my vehicle at home. My office doesn’t want to listen to excuse of wasting time at filing stations in search of fuel. So, I have to opt for public vehicle so that I won’t be sacked.”
Meanwhile, some aggrieved Nigerians have staged protests over fuel scarcity and the expensive prices of fuel and called on the Federal Government of Nigeria to find a lasting solution to the challenge.
The protesters blocked the Lagos Benin Expressway at Oluku Junction in expression of their displeasure, saying that hike in fuel is contributing negatively to skyrocketing prices of food items.
Many commuters and other road users were stranded during the demonstration as the busy road was totally blocked for hours.
“We can’t continue to experience this pain. We are tired. Government should find lasting solution to this issue. We are here just to let the world know that we are not happy and this fuel scarcity is really affecting us negatively. Enough is enough,” one of the protesters said.
There was no vehicular movement when the protesters, mostly youths, stormed the road.
Meanwhile, commercial motorists have been warned against steps they take in a bid to minimize the fuel consumption of their vehicles which could lead to loss of lives and property.
Speaking, the Executive Secretary, Office Of Transportation, Engr. Bilal Adiat said because petrol is scarce and expensive, hence commercial motorists are now improvising ways of reducing the fuel consumption of their vehicles so as to maximize profit.
Bilal said most of the steps taken by the commercial drivers are against the mechanical set-up of the vehicles which could lead to fire disaster and loss of lives and properties, urging for both motorists and Nigerians at large to be wary of the dangers inherent in keep fuel in gallons.
Despite Nationwide Blackout, FG Reveals Discos Failed to Utilise 1,070.36MW
As major parts of Nigeria continue to complain of blackout, the Federal Government has revealed that Electricity utility firms otherwise known as the DisCos had a total of 1,070.36 megawatts unused between December 24 and December 30, 2022.
For most Nigerians, prolonged power outage they experience could be attributed to lack of sufficient megawatts within the reach of the power utility companies.
Discos had lamented low power supply from generating companies (GenCos), which they attributed the blackout to.
While blaming GenCos for the incessant drop in electricity supply, DisCos through a statement from Ikeja Electric said it has been shedding load owing to low power allocation.
The General Manager of the Corporate Communication Department, EKEDC, Godwin Idemudia, while apologising to customers, especially those affected by the power outage, lamented a sharp decrease from the electricity it gets from the grid, saying it was not enough to meet the demand of its customers.
Hence, the continued lamentation of electricity consumers who are at the receiving end of the excuses proffered.
But, contrary to the argument and excuse adduced by EKEDC, latest power utilisation data obtained from the Transmission Company of Nigeria, an agency of the Federal Government, revealed that the Discos did not utilise the over 1,070MW of electricity between December 24 and December 30, 2022.
Nigeria has 11 Discos including Abuja, Benin, Eko, Enugu, Ibadan, Ikeja, Jos, Kaduna, Kano, Port Harcourt and Yola.
Figures from TCN showed that there are electricity that utility firms were not releasing to electricity consumers.
On December 24, 2022, the figures showed that a total of 118.04MW of electricity was unused by Enugu, Ibadan and Port Harcourt Discos, while the eight other power distributors took and distributed excess load on that day.
Also, on December 25, nine power distributors obtained excess load allocation, but two others including Enugu and Ibadan, could not distribute a total of 93.73MW of electricity.
However, the next day, being December 26, the quantum of unutilised energy increased, as seven Discos, including Abuja, Benin, Enugu, Ibadan, Jos, Kano and Port Harcourt, failed to distribute a total of 198.82MW of electricity.
While four companies took excess load allocation, according to TCN’s data, six of the power firms were said to be unable to distribute 180.99MW of electricity on December 27, as the remaining five took excess load allocation.
The data further revealed that the six Discos that could not distribute the 180.99MW of electricity include Abuja, Enugu, Ibadan, Jos, Kano and Port Harcourt.
The transmission company further stated that five distribution companies comprising of Benin, Enugu, Ibadan, Jos and Port Harcourt, could not distribute 89.09MW of power on December 28.
TCN stated that five Discos accepted excess load allocation that was more than their maximum load nomination for that particular day.
Nigeria’s Economy to Grow at a Subdued Pace in 2023 – CBN
The Central Bank of Nigeria (CBN) has said Nigeria’s economy would grow at a subdued rate in 2023 following a series of weak economic fundamentals.
The apex bank stated in the communique no 146 of the monetary policy committee signed by Godwin Emefiele, the Governor of the central bank, and obtained by Investors King.
According to the committee, global economic uncertainties heightened by Russia’s invasion of Ukraine, Covid-19 cases in China, rising interest rates and the surge in commodities prices are expected to spill over given Nigeria’s economic structure as a commodity-dependent nation.
Also, Nigeria’s rising inflation rate ahead of general elections is one of the factors that will weigh on growth in 2023 while the high unemployment rate, foreign exchange scarcity, and waning consumer buying power amid slowing new job creation are estimated to compound Nigeria’s woes.
On Tuesday, the monetary policy committee raised borrowing costs by 100 basis points to 17.5% from 16.5% despite the nation’s slowing growth. Nigeria’s economy grew at 3.54% in the second quarter of 2022 before slowing to 2.25% in the third quarter of 2022.
While there were reports that Electricity distribution companies (DisCos) have silently increased tariffs by as much as 19% since December 1, 2022 even with the fuel scarcity.
The Socio-Economic Rights and Accountability Project (SERP) on Monday filed a lawsuit against President Buhari over “the failure to reverse the unlawful, unjust, and unreasonable increase in electricity tariff, and to probe the spending of public funds as ‘investments and bailouts’ to DisCos and GenCos since 2005.”
Similarly, there are plans to remove fuel subsidy by the second half of 2023 in order to rein in expenditures and boost revenue.
All this at a time when the unemployment rate and earnings are at a record low, Naira to the dollar exchange rate at N750/$1 on the parallel market and manufacturing activities slowdown due to forex challenges would hurt growth in 2023.
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