What CBN Is Saying About Inflation & Devaluation of Naira

By Tolulope Oke

The Central Bank of Nigeria (CBN) revealed that due to severe inflation in Nigeria, imported goods would become more expensive, thereby depreciating the value of the Naira.

This is coming on the heels of the continuous hiked interest rates by the CBN.

Few weeks back, the CBN raised the stipulated minimal interest rate due on local currency savings deposits to 30% of the Monetary Policy Rate (MPR).

Similarly, in July the Apex bank increased the interest rate by 100 basis points, indicating an increase to 14 per cent.

It came barely two months after the CBN increased the interest to 13 per cent, citing the accelerating rate of inflation across the globe.

According to CBN Governor Godwin Emefiele, the MPC members’ concerns about the growing inflation, which had increased to 18.6% in June, were the driving force for the decision to hike the interest rate.

• READ ALSO: CBN Raises Interest Rate To 30%
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While the CBN continues to increase the interest rate, the latest index according to the National Bureau of Statistics reveals that Nigeria’s current inflation rate for July 2022 increased from the 18.6% recorded in June 2022 to a 17-year high of 19.64%.

In line with the CBN’s new revelation,  Dr Omamegbe Mo, a member of CBN’s Monetary Policy Committee stated: “The rising inflation in the country constitutes a major macroeconomic challenge which is exacerbated by foreign exchange pressures. We are an import-dependent economy.

“A higher inflation rate will further depreciate the value of the Naira as import prices become more expensive. The foreign exchange challenge remains daunting and addressing this challenge should be of utmost importance.”