The Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, has reiterated the Bank’s Monetary Policy Committee (MPC) determination to tame inflation through conventional methods.
Mr. Cardoso stated this in an interview with Bloomberg in London on Tuesday, June 25, 2024, while sharing key insights on the current state of the market, mainly focusing on the stability of the Naira and inflation rates.
He noted a deceleration in the M-o-M inflation rates, highlighting it as a positive development. He assured that the Monetary Policy Committee (MPC) members remained vigilant in monitoring inflation trends and ensuring a moderation of inflation numbers.
He asserted that MPC members will continue to monitor the trajectory and are determined to ensure that they keep inflation under control.
While highlighting a period of stability following previous volatility in the foreign exchange market, he expressed optimism about the recent improvements in liquidity and return of confidence to the market.
He attributed the new development to increased liquidity and a calmer approach from market participants on both the buy and sell sides.
He explained, stressing that people panicked and front-loaded their requests in the past. Now, a lot of that has calmed down. There’s no inclination to do that because liquidity has returned to the market.
Mr. Cardoso highlighted the significant achievement of merging disparate exchange rates into a more unified system. He mentioned that there were two different rates previously, but now there’s one rate, and he believes this is a positive development. He also stated that having a single rate allows companies to plan better, emphasising the importance of a predictable exchange rate for economic planning and investment.
Furthermore, he expressed confidence in the current market dynamics, where willing buyers and sellers operate freely. He noted that this has contributed to the stability of the Naira. However, he stressed the importance of continuous observation and management to ensure that the market benefits all participants.
Governor Cardoso highlighted the crucial role of coordinated monetary and fiscal policies in achieving economic stability, adding that the collaboration was essential for managing the macroeconomic fundamentals that influence the market, aiming to provide the best value for the Naira.
It will be recalled that Nigeria’s annual inflation rose to a 28-year high of 33.95% in May 2024. Recent data from the National Bureau of Statistics reveal that the M-o-M inflation rate slowed for the third consecutive month, validating the effectiveness of the Central Bank of Nigeria’s monetary policy tightening measures
