Regardless of CBN Efforts to Tame Inflation, Cash Provide Surges by 24%

Nigeria’s broad cash provide (M3) jumped 24 p.c to an all-time excessive of N114.2 trillion in March 2025, defying the Central Financial institution of Nigeria (CBN)’s ongoing financial tightening efforts aimed toward reining in inflation.

The M3, which serves as probably the most complete measure of cash in circulation inside an economic system, contains not solely the money utilized in on a regular basis transactions but in addition large-scale deposits and monetary belongings that affect lending, funding, and inflation.

Regardless of the CBN’s agency stance on financial tightening, the most recent information from the apex financial institution signifies a year-on-year enhance of 23.9 p.c, with the cash provide rising sharply from N92.18 trillion in March 2024.

On a month-on-month foundation, the determine climbed by 3.2 p.c from N110.70 trillion recorded in February 2025.

In a bid to counteract inflationary pressures and stabilise alternate fee fluctuations, the CBN withdrew N1.7 trillion from the monetary system by Open Market Operations (OMO) auctions in March 2025.

Analysts at Afrinvest Securities Restricted famous that the transfer was a part of broader efforts to cut back liquidity and funky rising client costs.

Regardless of these measures, financial institution credit score to the federal government expanded considerably, growing by 28.9 p.c year-on-year to achieve N25.85 trillion in March 2025, in comparison with N20.05 trillion in the identical month final yr. Nevertheless, on a month-to-month foundation, authorities borrowing from banks dropped by 4.6 p.c from N27.11 trillion in February.

In the meantime, credit score to the non-public sector rose modestly by 6.8 p.c year-on-year to N76.26 trillion in March 2025, up from N71.43 trillion in March 2024. Month-on-month, the rise was marginal, rising by simply 0.01 p.c from N76.25 trillion in February 2025.

Foreign money in circulation additionally rose considerably over the previous yr. The quantity of foreign money circulating within the economic system jumped by 29.5 p.c year-on-year to N5.00 trillion in March 2025, up from N3.86 trillion a yr earlier. Nevertheless, there was a slight decline on a month-to-month foundation, with the determine dipping from N5.03 trillion in February 2025.

Equally, the quantity of foreign money held outdoors the banking system climbed by 26.8 p.c year-on-year to N4.59 trillion in March 2025, in comparison with N3.62 trillion in March 2024. Month-on-month, foreign money outdoors banks elevated by 1.8 p.c from N4.51 trillion in February.

Over the past 5 years, the CBN has aggressively raised its Financial Coverage Charge (MPR), the benchmark rate of interest, from 11.50 p.c in 2021 to 27.50 p.c as of March 2025. Many of the enhance occurred prior to now yr, throughout which the speed was hiked by an unprecedented 875 foundation factors because the apex financial institution intensified its battle in opposition to inflation.

The tight financial stance has yielded some outcomes. Inflation, which stood at 24.48 p.c in January 2025, eased to 23.18 p.c in February. Nevertheless, the aid was short-lived, as inflation rose once more to 24.23 p.c in March, signaling persistent inflationary pressures regardless of the Central Financial institution’s continued efforts.