LAGOS, Nigeria (VOICE OF NAIJA)-Governor of the Central Bank of Nigeria, Dr. Olayemi Cardoso, affirmed that the Monetary Policy Committee (MPC) stands ready to take decisive actions to curb the nation’s persistently high inflation.
In an interview with the Financial Times on Monday, Cardoso indicated that interest rates would remain elevated for as long as necessary to address inflationary pressures.
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 Central Bank of Nigeria’s hawkish approach to inflation was evident from the first MPC meeting in February. At this meeting, the committee raised the benchmark lending rate by 400 basis points to 22.75%, up from 18.75%, and further increased it to 24.75% in March.
The upcoming MPC meeting is slated for May 20-21.
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As inflation persisted, financial analysts anticipated that the MPC would continue to raise rates.
Meristem Securities analysts forecasted an increase in headline inflation for April to 34.43% year-on-year, compared to the 33.20% reported in March 2024.
Despite the Central Bank of Nigeria’s current hawkish stance, Cardoso expressed hope that the prolonged high rates would not deter 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.
Regarding recent fluctuations in the naira, Cardoso noted that investors, who may have been inclined to leave the economy amidst currency fluctuations, now display increased comfort with the market’s stability.
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.”
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