The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has implied that the apex bank will persist with high interest rates until inflation decreases by implementing orthodox policies.
At 33.2%, inflation in Nigeria remains stubbornly high, the highest in three decades, while food inflation is even higher at 40%.
During an interview with the Financial Times, Cardoso emphasized that the Monetary Policy Committee (MPC), of which he is the chair, will do whatever it takes to control the increasing inflation.
Cardoso takes a different approach compared to his predecessor Godwin Emefiele, who faced an inflation crisis in Nigeria by printing money to fund government deficits exceeding the 5% limit permitted by law.
For a very long time, he mentioned that the CBN did not adopt orthodox monetary policies, and now the CBN wants to revert to using an orthodox approach, which will lead us to our desired destination. The apex bank has shifted its focus to prioritize price and monetary stability.
Recall that the key lending rate was lifted to 24.75% as a result of the 400 and 200 basis points hikes in the monetary policy rate in February and March.
Cardoso stated that the situation of the naira's fluctuating value against the US dollar has now stabilised.
Under Cardoso, the CBN's stance has been generally well-received by markets, although the policies face some domestic opposition, particularly from businesses citing the high cost of credit, despite the gradual return of foreign portfolio investors to the country.
