Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, has expressed the monetary authority’s concerns over the inflationary risks posed by rising liquidity levels in the banking system amid increasing monthly revenue disbursements by the Federation Account Allocation Committee (FAAC) to the three tiers of government.
The banker, who made his views known in a personal statement made after the 300th Monetary Policy Committee meeting held on May 20, 2025 but which was just published on the CBN’s official website on Saturday, maintained that the fiscal trend could frustrate the bank’s disinflation efforts if not countered by tight monetary conditions.
Noting that while inflation has started to moderate, Cardoso warned that emerging risks from increased liquidity injections required hawkish monetary stance, which the apex bank has been sustaining over the past months.
He clarified: “We are also confronted with increased liquidity injections into the banking system from statutory revenue distributions, highlighting the need for tight monetary conditions to avoid renewed inflationary pressures.”
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The CBN Governor’s comment on the risks of huge disbursement of revenues to the three tiers of government to general price level moderation came less than 24 hours after the Federation Account Allocation Committee (FAAC) shared the June 2025 allocation from the federation account totalling N1.818 trillion, which was 9.6% more than the N1.659 trillion shared in May this year, to the three tiers of governments on Friday.
Latest inflation data from the National Bureau of Statistics (NBS) in June this year showed that Nigeria’s headline inflation marginally eased to 22.22%, down from 22.97% in the preceding month, representing 11.97% decline from the 34.19% recorded in June 2024.
However, on a month-on-month basis, the inflation rate slightly increased to 1.68% in June from 1.53% in May.
