Inflation: CBN mops up N200bn in special Open market Operation

In its latest move to further rein in inflation, the Central Bank of Nigeria (CBN) has unveiled plans to mop up a total of N200.322 billion from the Nigerian banking system through a special Open Market Operation (OMO) at the rate of 16 per cent per annum.

Rising from a meeting of the Bankers’ Committee in Lagos on Thursday, June 15, 2017, the CBN said its decision to mop up liquidity was in reaction to the maturity of N206 billion on Thursday, June 15, 2017.

Disclosing this to newsmen, the Bank’s Acting Director in charge of Corporate Communication, Isaac Okorafor, further explained that the apex Bank decided on the rate of 16% per annum due to the falling rate of inflation, which he noted will continue to fall.

It will be recalled that the Bank on Monday, June 12, 2017 released its Treasury Bills Issue Programme for the third quarter of 2017 in which it disclosed that the maturity dates for the various tenors will be June 15, June 22, July 6, July 20, August 3, August 17 and August 31, 2017, respectively.

Recall that the National Bureau of Statistics (NBS) had on Thursday in its latest record said inflation dropped to 16.25 per cent in May from 17.24 per cent a month ago.

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According to the NBS report, inflation dropped from 17.24 per cent in April to 16.25 per cent in May with the highest increases recorded in food, solid and liquid fuels, clothing, fish and wines. “The Consumer Price Index (CPI), which measures inflation increased by 16.25 per cent (year-on-year) in May 2017. This was 0.99 per cent points lower than the rate recorded in April (17.24 per cent). This represents the fourth consecutive decline in the rate of inflation since January 2017,” the report said.

In the report, on a month-on-month basis, the headline index increased by 1.88 per cent in May 2017, 0.28 per cent points higher than the rate of 1.60 per cent recorded in April 2017 indicating the existence of persistent pressure on prices despite the general decline in year-on-year inflation. Month-on-month inflation cumulatively rose by 7.7 per cent since January 2017.