CBN Ways And Means Under Buhari Triggered Inflation – Sanusi

Former governor of the CBN, Muhammad Sanusi II, has said the CBN’s lending to the federal government under the administration of former President Muhammadu Buhari through Ways and Means triggered inflationary pressure in Nigeria and weakened the value of the Naira.

said the central bank had embarked on aggressive monetary tightening through various liquidity control instruments, including open market operations, Open Buy Back (OBB) and high T-bills rates, an indication that the bank was sticking to its core mandate of financial systems stability and inflation control.

“I am optimistic, especially in the short term. We’ve had eight years of rapid expansion of the central bank’s balance sheet through ways and means. And that has fueled inflation and weakened the currency. And that is the fact,” Sanusi II said yesterday at MTN Capital Markets Day

Acknowledging that the central bank can use different instruments to mop up excess money in circulation, Sanusi said it needs to do it in a manner that minimizes the cost to both the central bank and the government’s balance sheet, and that’s why it has to rely a little more on non-conventional instruments.

Read Also: Blue Economy To Generate $20bn Annually, Creates 2m Jobs – Oyetola Assures

“If you look at OMO Bills and OBB rates in the last few weeks, I can see that the central bank has started a process of aggressive tightening. OBB rates are beginning to approach what they should be. And I think that’s what the market needs to look at; that the central bank is taking this role of tightening money and fighting inflation as a primary focus,” he stated at the event.

He urged the audience to show understanding with the fact that those new monetary policies take time to manifest.

“For the short term, I don’t think we have a problem. I think the central bank is doing the right thing – tightening money, clearing the backlog, trying to fund the market, and I think we will have stability.”