CBN Governor Cardoso Shuns MPC Meeting But Controls Money Supply Low-key Using Other Tools
- Analysts have said that the CBN has been using other tools to curb inflation despite suspending the MPC meeting
- The CBN has been using the overnight rate to control money supply and inflation
- The overnight interbank rates rose by 21.28 basis points between August and November 2023
Legit.ng journalist Zainab Iwayemi has over 3-year-experience covering the Economy, Technology, and Capital Market
Instead of holding the regular Monetary Policy Rate (MPR), analysts have identified another tool the Central Bank of Nigeria used to rein in inflation.
Legit.ng had reported that the CBN had earlier suspended its Monetary Policy Committee (MPC) meeting in September, a few days after President Bola Tinubu announced the nomination of Femi Cardoso as the new CBN governor.
Source: UGC
The apex bank also postponed the MPC meeting scheduled for Monday and Tuesday, November 22, 2023.
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However, market reports by FSDH Research found that the CBN has been using the overnight interbank rate to control the money supply and rein in inflation.
According to Investopedia, overnight interbank rates are the interest rates at which a depository institution (generally banks) lends or borrows funds from another depository institution in the overnight market.
Interbank rates increased in months
According to BusinessDay, the overnight interbank rates rose by 21.28 basis points between August and November 2023. This follows the tightening policy stance of the CBN.
According to market reports, the rate increased from 2.60% recorded on August 31, 2023, to 23.88% as of November 20, 2023.
How this is affecting the market
On Monday, November 20, 2023, the average yield across the curve rose to 12.84% at the Nigerian treasury bill secondary market against 6.72% on August 31, 2023.
Similarly, the Open Market Operation (OMO) bills market yield rose across the curve to reach 14.71% as of Monday. This is from the 11.04% as of August 31, 2023, before Cardoso became the CBN governor.
Commenting on the development, Kaliba Bilala, founder of Tanabit, a financial data analytics company, said:
Monetary policy was not effective under past governors, even though they were raising the MPR. The current governor has stayed silent. But he is working behind the scenes to repair the transmission mechanism. The reason money market interest rates, within the control of monetary policy, have been rising since 25 October 2023.
Access Bank, Zenith, others pay N311bn in Income tax to FG in 9 months as CBN delays MPC meeting
Legit.ng reported that the leading commercial banks in Nigeria have reported a 132.1% rise in tax payments to the Nigerian government in the first nine months of this year.
The commercial banks paid about N311 billion in income taxes as against the N134.127 billion paid in the same period in 2022.
Vanguard reports that the banks’ financial statements revealed that profit before tax rose by 149.4% to N2.24 trillion from N898.9 billion in the same period last year.
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Source: Legit.ng
