The governor of the Central Bank of Nigeria, Olayemi Cardoso, has said that the members of the Monetary Policy Committee would do whatever is necessary to get a handle on the country’s persistent inflation.
The CBN’s hawkish stance on inflation had become obvious from the first MPC meeting held in February, when the committee raised the benchmark lending rate by 400 basis points to 22.75 per cent, from 18.75 per cent. It has since been raised to 24.75 per cent.
Cardoso said this in an interview with the Financial Times on Monday, indicating that interest rates would stay high for as long as necessary to tame inflation.
He told the Financial Times that there was “every indication” that the monetary policy committee 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 next MPC meeting is scheduled to be held on May 20-21.
Already, there are projections of a rate hike from the committee, even as inflation is projected to go higher.
Analysts at Meristem Securities projected an uptick in the headline inflation for April to 34.43 per cent year-on-year (vs. 33.20 per cent 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.
He maintained that raising rates had been essential.
“Hiking interest rates 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.
On fluctuations in the naira in recent times, Cardoso said investors, who were likely to exit the economy in response to currency fluctuations were now more comfortable with the market.
Speaking further in the interview with FT, Cardoso said that the apex bank was going to return to orthodox monetary policies, saying, “Let’s face it: for a long period of time, 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.”
SOURCE: PUNCHNG
