Amid widespread price volatility, the Central Bank of Nigeria (CBN) has set a 21.4% inflation goal for 2024, claiming that the local currency, the naira, is comparatively cheap.
CBN Governor Yemi Cardoso told an event held by the Nigerian Economic Summit Group on Wednesday that inflationary pressures are projected to fall in 2024 as a result of the CBN’s inflation-targeting strategy, which seeks to keep inflation at 21.4%.
The top bank had maintained an inflation goal of 6-9% until ex-President Muhammadu Buhari’s measures deteriorated the country’s pricing level.
Cardoso faces pressure to raise interest rates when the committee holds a rate-setting meeting next month for the first time since he took office in September. Inflation in December hit 28.92%, its highest level in more than 27 years.
“Inflationary pressures are expected to decline in 2024 due to the CBN’s inflation-targeting policy, which aims to rein in inflation to 21.4%,” Cardoso said in a speech. He added that improved agricultural output and the easing of global supply chain pressures would boost consumer confidence and purchasing power.
Nigeria’s central bank is likely to adopt a more traditional monetary policy stance under Cardoso, following years of unconventional measures implemented by his predecessor, Godwin Emefiele. In November, Cardoso announced the implementation of an inflation-targeting framework.
President Bola Tinubu implemented a number of changes after taking office last year, including eliminating a petrol subsidy and relaxing currency trading regulations. However, the country continues to suffer from a currency shortage and a huge difference between official and parallel market exchange rates.
“We believe that the naira is currently undervalued and, coupled with coordinated measures on the fiscal side, we will expedite genuine price discovery in the near term,” Cardoso said. “This coordinated approach will contribute to a more balanced and stable exchange rate.”
Cardoso said the CBN was trying to improve liquidity in the foreign exchange market, reiterating a pledge to clear outstanding FX obligations after paying at least $2 billion of the estimated $7 billion owed.
