January 15, (THEWILL) — The Central Bank of Nigeria (CBN) significantly intensified its liquidity management operations over the past year, with liquidity mop-up activities rising by 182% amid signs of easing inflationary pressures.
The sharp increase reflects the apex bank’s sustained use of monetary tools such as Open Market Operations (OMO), cash reserve adjustments, and discretionary sterilisation measures to rein in excess liquidity within the financial system. These actions form part of broader efforts to stabilise prices, support the naira, and anchor inflation expectations.
Analysts note that the aggressive liquidity withdrawal underscores the CBN’s tighter monetary stance, particularly following periods of elevated inflation driven by exchange-rate pressures, fuel price adjustments, and supply-side constraints. Recent data indicating a moderation in inflation suggests that the policy measures may be beginning to yield results.
However, the intensified mop-up has also contributed to tighter system liquidity, pushing short-term interest rates higher and increasing funding costs for banks and businesses. Market participants say this trade-off highlights the challenge facing policymakers as they balance inflation control with economic growth considerations.
Going forward, economists expect the CBN to maintain a cautious approach, adjusting liquidity conditions in response to inflation trends, foreign exchange dynamics, and overall macroeconomic stability.
Ogochukwu Onwaeze
