Analysts have attributed a rise in the money supply to the federal government’s borrowing to fund the budget, an increase in inflation, and multiple interventions by the CBN.

Professor of Capital Markets at Nasarawa State University Keffi and financial economist Uche Uwaleke said that the rising money supply is contributing to an increase in inflation and pressuring the central bank to raise its monetary policy rate (MPR).

“The CBN has recognised that the money supply is increasing, and that is the basis for the raise in MPR to 15.5 percent from 14 percent to restrain a further rise in inflation,” he said.

The CBN’s bailouts of the federal and state governments via its ways and means totaled trillions of naira, increased the money supply, and fueled a significant inflationary environment.

The data indicates that in August 2021, the Ways and Means balance was N16.1 trillion, but it increased to N22.068 trillion in August 2022. It is a yearly increase of 36%.

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