Nigeria’s Money Supply Sees 65% Year-On-Year Growth in August 2024
The Central Bank of Nigeria (CBN) has released data showing a significant increase in the country’s money supply, M2, in August 2024. According to the figures, M2 rose by 65% on a year-on-year basis to N107.1 trillion. This marks a substantial increase from the N64.8 trillion recorded in the same period last year.
On a month-on-month basis, M2 increased by 0.75% from N106.3 trillion in July 2024. The surge in money supply has led the CBN to take decisive action to stabilize the economy. The Monetary Policy Committee (MPC) held its 297th meeting last week and voted unanimously to raise the Monetary Policy Rate (MPR) by 50 basis points to 27.25%.
The interest rate hike was accompanied by adjustments to the Cash Reserve Ratio (CRR) for Deposit Money Banks, which was increased by 500 basis points to 50.00%. Merchant Banks, on the other hand, saw a 200 basis points hike to 16%. The CBN retained other monetary policy parameters to maintain stability in the financial sector.
Despite the rise in money supply, CBN Governor Olayemi Cardoso announced a plan to inject an additional N1.4 trillion into the financial sector to boost liquidity. This move aims to counterbalance the effects of the increased money supply and maintain economic stability.
The recent developments in Nigeria’s monetary policy will likely have far-reaching implications for the country’s economy. As the CBN continues to navigate the challenges of managing the country’s finances, investors and economists will be closely monitoring the situation to gauge the potential impact on the economy and financial markets.
