The Central Bank of Nigeria has disclosed it readiness to pull out up to N1 trillion from circulation in a bid to stabilise the economy.

Already N525 billion has been pulled out less than one week after the policy which seeks to tighten money supply, while additional N219 billion is slated to be pulled out next week

Banks’ treasury executives said they are preparing their treasury plans for more mop ups of about N300 billion .

The Central Bank Monetary Policy Rate, was increased to 12 per cent from 11 per cent while Cash Reserve Requirement, CRR, was hiked to 22.5 per cent from 20 per cent at its last meeting

Meanwhile, the International Monetary Fund said that it has again cut its growth forecast for Nigeria as the oil exporter faces substantial challenges from low crude prices.

In its annual review of Nigeria’s economic situation, the IMF said that gross domestic product growth will slow to 2.3 percent in 2016 from an estimated 2.7 percent in 2015.

It added that Nigeria’s general government deficit will grow further after doubling to 3.7 percent of GDP last year.

The IMF executive board said Nigeria needed to urgently implement policies to safeguard fiscal sustainability, reduce external imbalances and advance structural reforms that promote more inclusive growth.

http://www.financialwatchngr.com/2016/04/02/cbn-pull-n1trillion-circulation/

Ok, economists come tell us the implication on an average Nigerians

The IMF executive board said Nigeria needed to urgently implement policies to safeguard fiscal sustainability, reduce external imbalances and advance structural reforms that promote more inclusive growth.

In Buhari we trust. We pray he simplifies and unbundles all unbundl-ables. Nigeria shall be great again.

Pulling out money again from these already hard economy?

The term "inflation" refers to rising prices of essentials such as wheat, milk, meat, clothing, medical services, coffee, electricity, etc. or, alternatively, the decline in value of money so that it takes more dollars to buy the same goods and services. A high inflation rate is anything over the 3% to 4% annual range, which is considered benign. But, as a new investor, what are the specific effects of inflation? Why should you be concerned about its spectre haunting the economy?

Inflation Begins with Money Losing Value

To understand the effects of inflation, I want you to think about a few numbers:

• A $1.00 bill in 1971 had the same purchasing power as $5.24 does today. That is, what we call $1.00 would only buy 18¢ worth of goods in 1971.

• A £1.00 bill in 1971 had the same purchasing power as £10.60 does today. That is, what we call £1.00 today would only buy £0.09 worth of goods in 1971.

As you can see, the major effect of inflation is that a nation's nominal currency loses value.
That is, it takes more Dollars, or Pounds Sterling, or Euros, or Yen, or Swiss Francs, to buy the same quantity of goods.

Inflation Transfers Money from Savers and Investors to Debtors

If you follow the implications of this, you come to realize there are two other major effects of inflation.
1. The effect of inflation on savers and investors is that they lose purchasing power. Whether you've buried your money in a coffee can in the back yard or it is sitting in the safest bank in the world, it is becoming less valuable with the passage of time.

2. The effect of inflation on debtors is positive because debotrs can pay their debts with money that is less valuable. If you owed $100,000 at 5% interest, but inflation suddenly spiked to 20% per year, you are effectively watching 15% of your debt get paid off each year, totally free to you. At some point, you'd be able to get a minimum wage job at McDonald's for $100 per hour and just obliterate your debt.

The net effect of inflation is that it serves to transfer money from savers and investors to debtors. It punishes those who postpone their enjoyment and invested in building roads, schools, factories, and businesses and gives their reward to those who are in debt. It is a severe moral injustice, mostly caused by governments printing money to cover expenses that cannot be paid out of the general treasury revenue.

Another major effect of inflation is the damage it can do to the pocketbooks of average workers. Wages and salaries can lag cost of living increases, making families struggle to keep up as the price of everything form cornflakes to tuition increases faster than the take-home pay they receive from employers.

So in essence pulling money from circulation by CBN will reduce inflation and its damaging consequences on the economy.

I'd have prefer 6T be withdrawn. And no budget pass, to enable us feel the ongoing change better.

This is called Monetary policy by which the
monetary authority (CBN) controls the
supply of money, usually targeting an inflation
rate or interest rate to ensure price stability and
general trust in the currency. It is the opposite of Fiscal Policy. However maybe I might not be too wrong to say that there's confusion by the authorities going by the rate of Tax Nigerians are compelled to pay... Income tax, consumption tax, tax on every withdrawal or deposit ...transfer from the tune of 1k and above, even on the proposed tax on Calls, sms, data, pay TV... I mean these are directly FISCAL POLICY TO ADD MONETARY POLICY to it? I wonder how it works unless we expect abnormal equilibrium which may not be too pleasant to the household sector in the long run. Thanks