The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has indicated that the apex bank will maintain high interest rates until inflation decreases, by implementing conventional monetary policies.
Cardoso, in an interview with the Financial Times, said that the Monetary Policy Committee (MPC), which he chairs, would do whatever is necessary to keep the soaring inflation in check.
“There is every indication that the MPC would do whatever is necessary. They will continue to do what has to be done to ensure that inflation comes down,” Cardoso said, ahead of the committee’s meeting on May 20 and 21.
Cardoso’s approach sharply contrasts with that of his predecessor, Godwin Emefiele, who presided over an inflation crisis in Nigeria as the central bank frequently printed money to cover government deficits, exceeding the legal limit of 5 percent. Cardoso remarked, “Let’s face it: for a long period, the CBN did not embrace orthodox monetary policies. We want to return to using orthodox methods, which will lead us to our desired outcome. The apex bank has been reoriented to focus on price and monetary stability.”
Notably, the monetary policy rate was increased by 400 and 200 basis points in February and March, respectively, raising the key lending rate to 24.75 percent.
Regarding the fluctuating value of the naira against the US dollar, Cardoso noted that the situation has now stabilized.
“Investors had previously tended to head for the window in response to currency fluctuations. But now, there had been a fundamental shift. They’re getting more comfortable with the market,” he stated.
