Central Bank of Nigeria Vows to Combat High Inflation with Hawkish Stance

In an interview with the Financial Times, Dr. Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN), asserted that the Monetary Policy Committee (MPC) is committed to taking decisive measures to address the country’s persistently high inflation.

Cardoso indicated that interest rates would remain elevated for as long as necessary to effectively tackle inflationary pressures.

Cardoso underscored the MPC’s determination to employ all necessary measures to curb soaring inflation, emphasizing that there is a strong indication of the committee’s resolve to bring inflation under control. The CBN’s hawkish stance on inflation was evident from the outset, with a significant increase in the benchmark lending rate during the first MPC meeting in February and a subsequent upward adjustment in March.

With the next MPC meeting scheduled for May 20-21, financial analysts anticipate further rate hikes, considering the persistent inflationary trends. Despite the aggressive stance on interest rates, Cardoso expressed hope that elevated rates would not deter investment and production in the long run.

Acknowledging the impact of interest rate hikes on the foreign exchange market, Cardoso noted a moderation in forex market volatility, suggesting that the benefits of rate adjustments offset some of the challenges. He emphasized the need for a balanced approach, recognizing the trade-offs involved in monetary policy decisions.

Regarding recent fluctuations in the Nigerian currency, Cardoso highlighted increased investor confidence in the market, reducing the likelihood of abrupt capital outflows in response to currency volatility. He outlined the CBN’s commitment to adopting orthodox monetary policies to guide economic stability and growth, signaling a departure from previous unconventional approaches.

In conclusion, Cardoso affirmed the CBN’s dedication to restoring stability and fostering sustainable economic growth through prudent monetary policies. Despite the challenges posed by inflationary pressures and exchange rate volatility, the central bank remains resolute in its efforts to steer the economy towards a path of resilience and prosperity.