The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has expressed concern over the inflationary implications of rising liquidity levels in the banking system, warning that increasing statutory revenue disbursements through the Federation Account Allocation Committee (FAAC) could undermine the Bank’s disinflation efforts if not counterbalanced by tighter monetary conditions.
This is according to his personal statement made after the 300th Monetary Policy Committee (MPC) meeting held on May 20, 2025, and published on the CBN website over the weekend.
The personal statement read, “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.”
His remarks reflect growing concern within the apex bank about how elevated cash inflows from oil revenue and exchange rate gains are feeding naira liquidity across the system.
The CBN maintained its benchmark Monetary Policy Rate (MPR) at 27.5% during the meeting, holding all other parameters constant. While recent data shows a gradual easing of inflation, the MPC noted that underlying risks persist, particularly from energy price hikes, structural constraints, and exchange rate pressures.
Naijaonpoint earlier reported that the Federation Account Allocation Committee (FAAC) distributed a total sum of N1.818 trillion to the Federal Government, State Governments, and Local Government Councils as Federation Account revenue for the month of June 2025.
This represents a 9.6% increase—equivalent to N159 billion—when compared to the N1.659 trillion shared in May 2025.
The National Bureau of Statistics (NBS) reports that Nigeria’s headline inflation rate eased to 22.22% in June 2025, down from 22.97% recorded in May 2025.
The NBS data shows that on a year-on-year basis, the headline inflation rate was 11.97% lower than the rate recorded in June 2024, which was 34.19%.
The NBS noted that, on a month-on-month basis, the headline inflation rate in June 2025 stood at 1.68%, representing an increase of 0.15 percentage points from the 1.53% recorded in May 2025.
This indicates that the average price level rose at a faster rate in June compared to May 2025.
Ahead of the Central Bank of Nigeria’s Monetary Policy Committee (MPC) meeting scheduled for July 22, 2025, analysts are broadly projecting a hold on the MPR, currently at 27.5%.
The consensus reflects cautious optimism over moderating inflation and exchange rate stability, tempered by ongoing risks to growth and price pressures in key sectors.
However, a few anticipate a slight rate cut to 27.25%, alongside an adjustment to the asymmetric corridor, to signal a fine-tuning approach as macroeconomic conditions evolve.