In an interview with the Financial Times on Monday, Dr. Olayemi Cardoso, the Governor of the Central Bank of Nigeria, emphasized the Monetary Policy Committee’s commitment to curbing the country’s rampant inflation. Cardoso asserted that the committee is prepared to uphold elevated interest rates for as long as necessary to address inflationary pressures.
Highlighting the MPC’s resolute stance, Cardoso remarked that there are strong indications of the committee’s willingness to take decisive action to rein in inflation. “They will persist in implementing necessary measures to bring down inflation,” he affirmed.
The Central Bank’s proactive approach to inflation control was evident from the outset, with the MPC raising the benchmark lending rate by 400 basis points during its February meeting, followed by another adjustment to 24.75 per cent in March.
With the next MPC gathering slated for May 20-21, financial analysts anticipate further rate hikes, given the persistent inflationary trends. Meristem Securities’ analysts predict a rise in headline inflation to 34.43 per cent year-on-year for April.
Despite the stringent monetary policy stance, Cardoso expressed optimism that the elevated interest rates would not deter investment and production indefinitely. He acknowledged the impact of rate hikes on the foreign exchange market but emphasized the broader benefits, stating, “It’s not a zero-sum game. You lose on one side, you gain on the other.”
Addressing concerns over recent fluctuations in the naira, Cardoso noted an improved investor sentiment toward the market’s stability. He indicated a shift towards orthodox monetary policies, signaling a departure from previous approaches. “For a prolonged period, the CBN veered away from orthodox monetary policies. We are now recommitting to these principles, confident they will lead us in the right direction,” Cardoso concluded.
