'It's working' - CBN speaks on strategy to tackle soaring 18-year high inflation rate, expert reacts

The Central Bank of Nigeria said its monetary policy of tightening rates is having a positive effect on inflation.

Isa AbdulMumin, director of corporate communications CBN, made this known to journalists while reacting to the October inflation figures released by the National Bureau of Statistics (NBS) on Wednesday, November 15, 2023.

Legit.ng reports that NBS announced inflation rose to 27.33% in October 2023-an increase compared to the 26.72% recorded in the previous month.

However, on a month-on-month basis, inflation in October 2023 stood at 1.73%, 0.37% lower than the rate recorded in September 2023.

CBN defends inflation policy fight

Reacting to the development, AbdulMumin said the low rate increase in October 2023 compared to September 2023 results from the bank's monetary policy stance to tighten rates.

He added that the apex bank's money market reforms were yielding the desired effect.

“Aggressive monetary tightening using various liquidity mechanisms including removing the cap on the standing deposit facility (SDF) and open market operations had raised open buy back (OBB) rates from less than 1 percent in August to their expected levels around the monetary policy rate today.

“In spite of 0.61 percent increase in the headline inflation rate from 26.72 percent in September 2023 to 27.33 percent in October 2023.” The CBN spokesman further stressed that the inflation will go down gradually.

"Available statistics showed that the first indication of deceleration in prices was recorded in September and further reforms in the money market, which commenced in October, had accelerated easing in prices as indicated by the substantial drop in month-on-month changes recorded in October

“Moderation in month-on-month changes in prices observed in the headline, food and core components of the consumer basket followed reforms in the money market and relative stability in the FX market.”

Expert agrees with CBN

Similarly, Muda Yusuf, the chief executive officer of the Centre for the Promotion of Private Enterprise (CPPE) and the immediate past Director General of Lagos Chamber of Commerce and Industry (LCCI), confirmed a note of optimism reacting to the inflation figures. He said the government is taking some steps to address these challenges.

His words: "Especially the exchange rate; the supply side issues are being tackled through the mobilisation of foreign exchange, especially from external sources as seen in the President’s visit to Saudi Arabia, Dubai and the United Nations General Assembly, all in an efforts to get the needed investments which will come, in form of forex.