The Central Bank of Nigeria has predicted a 24.64 per cent growth in broad money supply, also known as M2 for 2012.

The CBN, in a report on Monetary, Credit, Foreign Trade and Exchange Policy Guidelines for fiscal years 2012/2013, on Tuesday, added that the money supply would also grow by 18.38 per cent in 2013.

According to the report, the strategy of monetary policy will continue to be monetary targeting, adding that the bank will maintain the close monitoring of broad money supply alongside other key monetary aggregates.

It said, “Monetary policy shall continue to be proactive, involving the discretionary management of the CBN’s balance sheet, with a view to ensuring that the operating variables are within programme targets. 

“The monetary policy rate shall remain the anchor rate, which is expected to drive other interest rates in the economy. Consequently, the MPR shall be adjusted periodically in response to prevailing liquidity conditions and the stance of monetary policy.”

The report noted that the primary channel of monetary management would continue to be open market operation, supported by reserve requirements and discount window operations.

“The CBN’s intervention securities will be issued, as the need arises, to complement OMO in effective liquidity management. Federal, state and private sector instruments approved by the bank shall continue to be eligible for discount window operations,” it added.

On the outlook for the domestic economy in 2012 and 2013, it said it was cautiously positive.

It added, “The global demand for crude oil is projected to remain sluggish as the United States and Euro zone economies recover slowly. Thus, crude oil prices are expected to continue to be favourable to the domestic economy. The agricultural sector is expected to lead growth and remain robust if recent trends in rainfall across the country and the increased public sector funding of the sector are sustained.

“With bumper harvest, food prices would trend downwards, thus moderating inflationary pressures. However, the phased removal of subsidy on petroleum products and full implementation of the National Minimum Wage across the country could counteract the gains in inflation. The major challenge for policy in Fiscal 2012/2013 would thus be containing upward trending inflationary pressures.”

Source: Punch/Ademola Alawiye