- The governor of the Central Bank of Nigeria, Olayemi Cardoso, said the CBN is not going back on its orthodox monetary policy approach to tackling inflation
- Cardoso said the results of the CBN’s approach will become visible in Q1 2025
- He said the CBN will collaborate with relevant government agencies to tackle challenges
Despite calls from various quarters for a different approach to tackling Nigeria’s surging inflation, the governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, insists that the apex bank will maintain its orthodox monetary policy measures.
At a press briefing after the 298th Monetary Policy Committee (MPC) meeting of the CBN in Abuja on Tuesday, November 26, Cardoso said the apex bank would continue with its approach and would deploy every tool at its disposal to combat inflation.
He said, “Let me first say that the Central Bank is resolute and committed to continuing to fight the war against inflation. There’s no going back on that.
“And as I’ve said at previous fora, we are going to deploy everything in our arsenal to ensure that we are able to tame it. And of course, this entails the return to orthodox monetary policies. So, I think it is important to state that up front there’s no going back on that.”
Cardoso’s statement follows the decision of the MPC to further tighten monetary policy as a measure to tame persistent inflationary pressures.
The committee raised the Monetary Policy Rate (MPR) for the sixth time to 27.50 per cent, 25 basis points higher than the 27.25 per cent it voted at its 297th meeting in September.
The MPC retained the Cash Reserves Ratio (CRR) for Deposit Money Banks (DMB) at 50 per cent and 16 per cent for merchant banks and retained the Liquidity Ratio (LR) at 30 per cent and asymmetric corridor at +500/-100 basis points around the MPR.
Despite the CBN’s hawkish monetary stance, Nigeria’s inflation has remained defiant, soaring to 33.88 per cent in October 2024, a 1.18 per cent increase from the 32.7 per cent recorded in September 2024, attributed to the increase in transportation costs and higher food prices.
Results of CBN’s approach will start reflecting by Q1 2025 – Cardoso
Cardoso noted that the results of the apex bank’s policies may not be immediate and could take up to six to one year before manifesting.
He, however, assured that the results of the CBN’s efforts will become visible by the first quarter of 2025, going by the timeline the bank began monetary tightening.
Cardoso said, “It’s also important for people to understand that there’s a timeline between when you implement policies and when they have impact. And that timeline, quite frankly, can be, you know, anything up from six months to nine months to a year. All depends on what you’re doing.
“Our own perspective is that we expect to see greater results in the first quarter of 2025 and you can do the math from the time we started tightening. So, we expect to see this in the first quarter of 2025.”
‘CBN will collaborate with relevant agencies to address challenges’
Cardoso highlighted that the CBN will work closely with relevant government agencies to complement its inflation-curbing efforts.
He noted that broader structural reforms were needed to address underlying challenges, such as supply disruptions and infrastructure deficiencies, which contribute to the inflationary pressures in the economy.
CBN will adopt ‘more measured’ approach towards lowering interest rate – Cardoso
Meanwhile, TheRadar reported that the governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, said the bank is cautious about lowering the interest rate due to the persistently high inflation rate in Nigeria.
Cardoso said though central banks around the world are lowering interest rates, the CBN’s approach is “a lot more measured” and considering the Nigerian context to avoid the inflation rate getting out of control.
