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CBN Increases Interest Rate to 16.5% as Inflation Quicken to 21.09% in October

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The Central Bank of Nigeria (CBN) led monetary policy committee has raised interest rate by another 100 basis points from 15.5% to 16.5%, the apex bank disclosed on Tuesday.

Godwin Emefiele, the central bank Governor, who chaired the meeting, said the decision was to ease escalating inflation rate and sustain gains recorded in recent months.

According to him, given that all the causative factors like rising inflation in advanced economies, slowing China growth, disruptions in the global supply chain, ongoing war in Ukraine and other dominant headwinds, loosen option was not desirable.

The governor who spoke with the press after the meeting, said key macroeconomic indicators suggest rebound in output growth for the rest of 2022, which may occur at a much-slower pace than earlier anticipated, in the light of unfolding domestic and external shocks to the economy.

The domestic shocks originate from the persisting insecurity inhibiting economic agents; rising cost of debt and debt servicing; deteriorating fiscal balances; increased spending as the 2023 general elections approach; and continued uptrend in inflationary pressure.

Nigeria’s inflation rose to a record high of 21.09% in October despite efforts by the central bank to rein in consumer prices and cushion growth.

Therefore, the member committee voted unanimously to raise the Monetary Policy Rate, with nine members voting to raise the interest rate by 100 basis points while two members voted to raise it by 50 basis points.

In summary, the MPC voted to:

I. Raise the MPR to 16.5 per cent;
II. Retain the asymmetric corridor of +100/-700 basis points around the MPR;
III. Retain the CRR at 32.5 per cent; and
IV. Retain the Liquidity Ratio at 30 per cent.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Economy

Nigerians Struggle as Sachet Water Prices Hit Record Highs Amidst Economic Hardship

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As economic challenges persist in Nigeria, citizens face yet another hurdle of soaring prices of sachet water, a vital source of drinking water for many.

Sachet water, colloquially known as ‘pure water,’ served as a convenient and inexpensive option for hydration, with prices starting at N5 in the early 2000s.

However, over the years, the cost has steadily climbed to as high as N50 per sachet.

This exponential increase has forced many Nigerians to seek alternative sources of water, including boreholes and wells, despite concerns about their safety.

Residents across the country, from Lokoja to Abuja, lament the financial strain caused by the inflated prices.

Marvelous Sanni, a resident of Lokoja, recounts how a bag of sachet water, once priced at N200, now sells for N400 to N500.

Families like hers have been compelled to turn to borehole water, raising questions about sanitation and health risks.

The situation is dire for households like that of Margret Danjuma in Abuja, who can no longer afford the daily consumption of sachet water.

Resorting to purchasing water from boreholes, Danjuma reflects the broader struggle faced by many Nigerians in securing clean and affordable drinking water amidst economic turmoil.

Local businesses, too, feel the pinch, with some restaurants discontinuing the provision of water to customers or resorting to unconventional methods like selling water in nylon bags.

The Association of Pure Water Producers attributes the price surge to rising production costs, including the cost of materials and treatment.

Experts and consumer protection agencies express concern over the unjustifiable price hikes, attributing them to greed and cartel-like behavior within the industry.

Calls for government intervention to regulate prices and ensure affordability resonate amid the growing hardship faced by Nigerians nationwide.

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Economy

Port Harcourt Refinery Receives Over 450,000 Barrels of Oil – Mele Kyari

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The Nigerian National Petroleum Corporation Limited (NNPC) has announced a significant milestone in the rehabilitation of the Port Harcourt refinery, with over 450,000 barrels of oil already stocked into the facility.

Mele Kyari, the Group Managing Director of NNPC, disclosed this development during a press briefing after appearing before a Senate Ad-hoc Committee investigating the various Turn Around Maintenance projects of the country’s refineries.

Kyari’s revelation underscores the progress made in the rehabilitation efforts of the Port Harcourt refinery, which has been undergoing mechanical works alongside the Warri and Kaduna refineries.

The influx of crude oil into the Port Harcourt facility signals a crucial step towards its operational revival, following years of underperformance and neglect.

Addressing the Senate committee, Kyari reiterated NNPC’s commitment to fulfilling its promises regarding the refinery rehabilitation projects.

He emphasized the importance of regulatory compliance testing before commencing operations, assuring stakeholders that the Port Harcourt refinery is poised to restart operations within the next two weeks.

The news of the refinery receiving a substantial volume of oil injects optimism into the Nigerian energy sector, highlighting the potential for increased domestic refining capacity and reduced dependence on imported petroleum products.

It also aligns with the government’s broader agenda of revitalizing the country’s oil and gas industry to drive economic growth and self-sufficiency.

As the Port Harcourt refinery gears up for a potential restart, attention now turns to the forthcoming regulatory compliance tests and operational readiness assessments.

The successful revival of the refinery holds the promise of not only bolstering Nigeria’s energy security but also stimulating broader economic development and job creation initiatives.

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CBN Governor Transfers N100bn Worth of Fertilisers to Agriculture Ministry for Food Security Enhancement

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The Central Bank of Nigeria (CBN) Governor, Olayemi Cardoso, handed over N100 billion worth of fertilisers to the Federal Ministry of Agriculture and Food Security.

The ceremonial handover took place at the ministry’s headquarters in Abuja, where the Minister of Agriculture and Food Security, Abubakar Kyari, received the substantial contribution.

During the handing over ceremony, Governor Cardoso emphasized the CBN’s commitment to maintaining price stability, identifying the cost of food as a critical component of inflation.

He noted that addressing food inflation is pivotal due to the significant portion of household expenditure allocated to food and non-alcoholic beverages in Nigeria.

Despite the implementation of various measures by the CBN to curb inflation, the inflationary pressures remain largely driven by escalating food prices.

Cardoso acknowledged the challenges posed by transient inflationary pressures but expressed optimism about substantial alleviation by the third quarter of 2024.

The collaboration between the CBN and the Ministry of Agriculture aims to mitigate the surge in food prices by enhancing food productivity and security.

In alignment with its strategic shift, the CBN veered away from direct quasi-fiscal interventions and transitioned towards leveraging conventional monetary policy tools to execute monetary policies.

As part of this strategy, the CBN announced the allocation of 2.15 million bags of fertiliser valued at over N100 billion to support the Ministry of Agriculture in its efforts to enhance food productivity and security.

Minister Kyari praised the CBN for providing fertilisers, emphasizing their significance as the majority cost value in agricultural production inputs.

He highlighted the challenges faced by the agriculture sector due to various factors, including the COVID-19 pandemic, flooding, climate change, and the naira redesign policy.

However, Kyari expressed optimism about mitigating these challenges and reiterated the importance of fertilisers in agricultural production.

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