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CBN Governor: Interest Rates To Remain High To Combat Inflation
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CBN Governor Olayemi Cardoso suggests maintaining high interest rates to tackle inflation.
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Nigeria’s inflation rate stands at 33.2%, with food inflation even higher at 40%.
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Cardoso emphasizes the Monetary Policy Committee’s commitment to curbing inflation.
EKO HOT BLOG reports that the Central Bank of Nigeria Governor, Olayemi Cardoso, has suggested that the institution will maintain high interest rates to address inflation, opting for conventional policies. Inflation in Nigeria persists at 33.2%, the highest in three decades, with food inflation even higher at 40%.
Speaking to the Financial Times, Cardoso emphasized the Monetary Policy Committee’s commitment to curbing inflation, stating they will take necessary measures during their upcoming meeting on May 20 and 21.
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Cardoso’s stance is in sharp contrast with his predecessor Godwin Emefiele, who oversaw an inflation crisis in Nigeria as the central bank regularly printed money to fund government deficits beyond the 5 per cent limit permitted by law.
He stated: “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. The apex bank has been reoriented to focus on price and monetary stability.”
Inflation
Recall that the monetary policy rate was hiked by 400 and 200 basis points in February and March respectively, which lifted the key lending rate to 24.75 per cent.
Speaking on the fluctuating value of the naira against the US dollar, Cardoso said the situation had now stabilised.
“Investors had previously tended to head for the window in response to currency fluctuations. But now, there had been a fundamental shift. They’re getting more comfortable with the market,” he stated.
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Markets have generally welcomed the CBN’s stance under Cardoso, but the policies do not receive universal domestic support, with businesses complaining about the high cost of credit even as foreign portfolio investors have gradually returned to the country.
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