Worried by the failure of previous efforts to achieve single digit inflation, authorities of the Central Bank of Nigeria (CBN) yesterday insisted on the tightening of monetary policies even as they raised the Monetary Policy Rate (MPR) by 25 basis points from its previous level of 6.25 per cent to 6.5 per cent.
The MPR is the anchor rate at which the CBN lends to Deposit Money Banks for onward lending to customers and investors.
The CBN governor Mallam Lamido Sanusi who spoke at the end of the Monetary Policy Committee (MPC) meeting said that there is the need to pursue the current policy thrust of monetary tightening in view of the perceived inflation risks in the near term.
The various policy making organs of government have over the time expressed concern over the impact of the 2011 elections releasing more money into the system.
The CBN boss who said that although there has been strong emphasis on Capital and infrastructural development , the pegging of recurrent expenditure in the 2011 budget proposals at over 70 per cent remains a source of concern.
"For this reason, the M PC believes that the risk to price stability posed by fiscal operations will need to be constantly monitored if inflation is to be brought down to single digit levels in the short to medium term", he said.
Although he informed that the nation's external reserves have appreciated to $33.26 billion as at January 20. 2011 up from the December 2010 level of $32.32 billion, he regretted that the issues of huge Joint Venture Cash calls, funding of foreign exchange market and maintenance of subsidy on