Following the economical crisis and level of hardship in the country, Dr Olayemi Cardoso the Governor of the Central Bank of Nigeria, has urged the members of the Monetary Policy Committee to do necessary thing to tame the country’s high inflation.
The CBN governor made this known in an interview with the Financial Times on Monday, stressing that interest rates would stay high for as long as necessary to tackle inflation.
He noted that there was “every indication” that the MPC would “do whatever is necessary” to keep soaring inflation in check.
“They will continue to do what has to be done to ensure that inflation comes down,” Cardoso said.
The CBN’s hawkish stance on inflation became obvious from the first MPC meeting held in February when the committee raised the benchmark lending rate by 400 basis points to 22.75 percent, from 18.75 percent and reviewed upward to 24.75 percent in March.
On May 20-21, the next MPC meeting will be held.
As inflation remained adamant, the financial analyst had projected the MPC further hike rates.
Analysts at Meristem Securities projected an uptick in the headline inflation for April to 34.43 percent year-on-year (vs. 33.20 percent YoY reported in March 2024).
Despite the current CBN’s hawkish stance, Cardoso said he hoped that high rates would not be for too long and discourage investment and production.
“Hiking interest rates obviously has had a dampening effect on the foreign exchange market, so that has begun to moderate. It’s not a zero-sum game. You lose on one side, you get on the other,” he said.
Cardoso explained that investors, who were likely to exit the economy in response to currency fluctuations, were now more comfortable with the market.
He added that the apex bank was going to return to orthodox monetary policies, saying, “Let’s face it: for a long period, the CBN did not embrace orthodox monetary policies. We want to go back to using an orthodox method, and it will take us to where we want to go.”
