Who will finance the budget?

  My column in the guardian today asks questions about what continues to be a worrying trend: the underhand financing  of the federal government by the central bank. My concerns are driven by the chart below which shows the claims to the federal government by the CBN. Notice the spike over the last three years.… Continue reading Who will finance the budget?

The inflation march continues + future shocks on the way?

The relentless march of inflation continues. The NBS reports the headline number as 18.3% in October, up from 17.9% in September. It’s also inching up on a month-on basis. There are some who would argue that the central bank does not need to act and should in-fact ease monetary policy. They say inflation is supply… Continue reading The inflation march continues + future shocks on the way?

Naira struggles: The guns are out.

I haven’t written anything about the naira in a while. We all know the story. An oil price-crash induced dollar shortage has turned the CBN into a soviet style apparatchik, fixing prices and trying to wrestle the market to submission. We thought the recession opened their eyes to the reality, and for a few weeks… Continue reading Naira struggles: The guns are out.

Loss of central bank independence in practice: the return of the fuel subsidy

The details on the naira float that was not a float have been disclosed in recent weeks. Although many suspected that the CBN was secretly controlling rates behind the scenes, some insiders have come out to speak on it. The issue has moved from a case of “are they really doing that?” to “Yes, they… Continue reading Loss of central bank independence in practice: the return of the fuel subsidy

Naira struggles: Look at me. I’m floating!

The Central Bank caved a few weeks ago and dropped its naira fixing policy. According to the official announcement they were going to adopt a new floating regime with exchange rates determined by market conditions aka demand and supply. A policy shift that most, including myself, applauded. Except one guy like that who didn’t seem… Continue reading Naira struggles: Look at me. I’m floating!

No QE Please. Thank You.

My good friend Feyi, also know as @DoubleEph wrote an interesting piece about a potential way to reduce interest rates in response to El-Rufai’s threat to banks. You know how these politicians always want banks to reduce interest rates without understanding why the rates are high in the first place. Feyi suggests using QE to… Continue reading No QE Please. Thank You.

Another Casualty in the War to Fix the Naira

First a recap. October 2014 the crude oil slide begins with prices falling from around $100 a barrel to around $45 a barrel. Remember crude oil makes up somewhere around 90% of our exports. In response the Naira tried to weaken. The CBN tried to stop it from weakening but after a couple of billion… Continue reading Another Casualty in the War to Fix the Naira