The financing of the Nigerian government’s fiscal deficit by the central bank is impeding the effectiveness of its phase of monetary tightening since 2011. As the money supply continues to increase, the country’s inflation rate has accelerated to 22.0% in March from 21.9% in February. To combat inflation, the central bank has raised its benchmark rate by 650 bps since May. However, credit to businesses and consumers still increased by 16%, and M2 rose by 18.3% YoY in February, resulting in a total money supply in the economy of 53.3 tln naira (USD 115.7 bln) and credit to the private sector of 41.8 tln naira, the highest on record. To avoid penalties, lenders must hold 32.5% of deposits as reserves and extend at least 65% as loans.