The Central Bank of Nigeria (CBN) has continued its aggressive monetary policy stance, selling one-year Treasury Bills (T-Bills) at a stop rate of 22.1% during its latest auction. This move as seen on the government Securities Summary page of the CBN website is seen as a measure to curb inflation and manage liquidity in the economy.
The auction, held on July 24, saw a total offering of N277.96 billion spread across different tenors. The high interest rate on the one-year T-Bill is indicative of the CBN’s determination to attract investors and mop up excess liquidity from the system.
This development comes as the country grapples with rising inflation, which has eroded purchasing power and put pressure on households and businesses.
By offering attractive returns on T-bills, the CBN aims to encourage investors to park their funds, thereby reducing the amount of money circulating in the economy and cooling inflationary pressures.
However, analysts have cautioned that while high interest rates can help to curb inflation, they can also stifle economic growth by making borrowing more expensive for businesses.
It is hoped that the apex bank will need to carefully balance its monetary policy objectives to ensure a conducive environment for both price stability and economic expansion.