CBN MPC Communique No. 38 - September 2004
Central bank: cbn | Type: statement | Date: 2004-09-20

PRESS RELEASE
CENTRAL BANK OF NIGERIA, COMMUNIQUE NO. 38 OF THE
MONETARY POLICY COMMITTEE IN SEPTEMBER 2004
The Monetary Policy Committee (MPC) at the end of its 185 th
meeting agreed to sustain the sus pension on the withdrawal of public
sector deposits from the deposit mo ney banks, in or der to enhance
the stability of the financial system.
2. Since the last meeting of the MP C, the pressure on prices has
moderated. Both the moving average and point on point inflation rates
fell from 19.4 and 14.1 per cent in June 2004 to 19.1 and 10.7 per
cent in July. The gross official re serves have risen from US$12.2 to
US$12.3 billion, while the arbi trage premium between the DAS
exchange rate and the bur eaux de change has stabilized around 5.5
per cent. In addition, the growth in monetary aggregates remained
within the program targets as ba nk credits (net) to government
continued to fall owing to prudent fiscal operations of the federal
government. In the first eight mont hs of the year, broad money stock
(M2) increased by 9. 0 per cent, compared with the permissible
expansion rate of 16.0 per cent for fiscal 2004.
3. For the rest of 2004, the Committee noted that the combined
effect of the high international oil price and a continuation of current
prudent macroeconomic policies would help to lower the inflation rate
close to single digit level by the en d of the year. In particular, the
Committee expressed optimism that t he substantial fiscal savings
from the excess crude oil proceeds since the beginning of 2004 would
continue to reduce demand pressures during the remaining months of
the year. The Committee, therefore, agreed not to introduce any new
policy action. However, macro economic developments shall continue
to be monitored with a view to fi ne-tuning the existing policies, if
necessary.
James K.A. Olekah
Secretary, Monetary Policy Committee
Abuja
th September, 2004