Dear Subscriber,

To the surprise of most analysts and the markets, the MPC jacked up the policy rate from 18.75% to 22.75% in one fell swoop.

The CBN, facing the daunting task of reining in galloping inflation, which has reached a record high of 29.9%, had to bite the bullet.

It acknowledged the hydra-headed nature of price inflation in Nigeria. It attributed it mainly to the exchange rate pass-through effect on domestic prices and an astronomical increase in the broad money supply (N93.7trn).

It not only increased the policy rate but also raised the cash reserve ratio (CRR) from 32.5% to 45%.

These policy steps were taken as Nigerians took to the streets to protest the high cost of living. In the attached slides and video, Bismarck Rewane discusses the implications of this monetary policy move and its limitations as a tool of economic management.

He also cautions policymakers that the protests are a wake-up call. A failure to do the right thing could result in what Bob Marley says in his song, Natural Mystic.

“There’s a natural mystic blowing in the air.

If you listen carefully, you will hear.

This could be the first trumpet.

Might as well be the last.”

As they say, a stitch in time saves nine.

Enjoy your read!