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Inflation rate ’ll remain high till... - CBN - Nigeria’s external reserves drop to $47bn Gbola Subair, Abuja Thursday, April 9, 2009 THE Central Bank of Nigeria (CBN) has expressed concern over the high rate of inflation in the country, stating that it is going to remain high till mid 2009. Governor of the apex bank, Professor Chukwuma Soludo, said this on Wednesday in Abuja at a press conference after the Monetary Policy Committee meeting. advertisement The governor who said inflation had been high and was a matter of concern, disclosed that the committee noted the upward swing of the year-on-year headline inflation from 14 per cent in January 2009 to 14.6 per cent in February 2009. Noting that inflation as it affected foodstuffs increased from 18.4 per cent to 20 per cent within the same period, Professor Soludo stated that the outlook for inflation in the near term remained uncertain. Nonetheless, the CBN governor said the inflation rate could be brought down to single digit by mid 2009 in response to aggregate demand. On the exchange rate, Professor Soludo said the committee was satisfied with the positive outcome of measures taken recently in stabilising the exchange rate in all the segments of the market “The demand for FOREX has moderated significantly in the retail Dutch Auction System and will continue to be sustained in the near term,” the CBN governor said. The committee, Professor Soludo also explained, was satisfied with the financial conditions in the country, adding that, “there are no apparent systemic threats to the banking system.” Noting the importance of credible and effective monetary policy, the CBN said the committee had reaffirmed its commitment to coordinate monetary policy actions with those of fiscal and other institutional and regulatory policies. Because of liquidity tightness and relatively higher interbank interest rates, Prof Soludo said the MPC had decided to reduce Monetary Policy Rate from 9.75 per cent to eight per cent, reduce the liquidity ratio from 30 per cent to 25 per cent and the Cash Reserve Requirement from two per cent to one per cent with effect from April 14, 2009. In another development, the crashed price of crude oil in the international market has taken its toll on Nigeria’s external reserves, dropping to $47 billion from $65 billion recorded prior to the global financial meltdown.