Olayemi Cardoso, the governor of the Central Bank of Nigeria (CBN) has raised concerns over the growing liquidity levels in the banking system from statutory revenue distributions, warning that the surge may spike inflationary pressures and trigger a tight monetary measure.
“We are also confronted with increased liquidity injections into the banking system from statutory revenue distributions, highlighting the need for tight monetary conditions to avoid renewed inflationary pressures,” Cardoso said after a May 20 committee meeting, the central bank said in a statement published on its website.
The windfall from oil revenue and exchange rate gains are feeding naira liquidity across the banking system, a situation that could result in money-induced inflationary concerns, countering the efforts of the apex bank to curb rising prices and stabilise the economy.
