The Central Bank of Nigeria (CBN) has expressed its resolve to sustain the single-digit inflation in the country.

The central bank specifically stated that its objective is to bring inflation down to six per cent before the end of 2015, even as it fixed an upper limit of nine per cent for inflation.

The CBN stated this in its “Monetary, Credit, Foreign Trade and Exchange Policy Guidelines for Fiscal Years 2014/2015,” posted on its website at the weekend.

Nigeria’s inflation stood at 7.7 per cent as at February.

According to the central bank report, the primary objective of monetary policy in 2014/2015 remains the maintenance of price stability.

It assured Nigerians that it would continue to adopt a medium-term framework for the conduct of monetary policy in the period.

The CBN pointed out that the rationale for the framework was anchored on the fact that monetary policy impacts on its ultimate goal with a lag, saying that the framework would thus enable it to avoid over-reaction to temporary shocks and time inconsistency problems associated with frequent changes in policies.

“The aim is to create an environment characterised by low inflation that is conducive for sustainable economic growth and job creation.

“The Bank shall continue to take necessary steps to ensure banking system soundness and overall financial system stability as well as enhance the efficiency of the payments system. It shall sustain the effective enforcement of financial market rules to promote the evolution of credible financial markets,” it stated.

Furthermore, it pointed out that there would be close monitoring of growth in broad money supply (M2), with projections of 14.52 and 14.74 per cent in 2014 and 2015, respectively.

The also said it would continue to take necessary steps in ensuring banking system soundness and overall financial system stability.

“It shall sustain the effective enforcement of financial market rules to promote the evolution of credible financial markets.
“The Monetary Policy Rate will continue to be the anchor rate for short-term interest rates. The Monetary Policy Committee (MPC) will regularly review the rate in response to prevailing liquidity conditions and other developments in the economy,” it added.

According to the CBN, Open Market Operation (OMO) auctions would continue to be its major tool for liquidity management.

Source: Thisday