Mr Olayemi Cardoso who is the governor of the Central Bank of Nigeria said that the members of the Monetary Policy Committee would do whatever is necessary to get a handle on the country’s persistent inflation.
The CBN’s aggressive position on inflation had become obvious from the first MPC meeting held in February and of which the committee raised the benchmark lending rate by 400 basis points to 22.75% from 18.75%. It has since been raised to 24.75 per cent.
The Central Bank of Nigeria Governor in an interview indicated that interest rates would stay high for as long as necessary to stop inflation.
He said there was “every indication” that the monetary policy committee would “do whatever is necessary” to keep soaring inflation in check.
The next MPC meeting is scheduled to be held on May 20-21.
Already, there are projections of a rate hike from the committee, even as inflation is projected to go higher.
Despite the present strong stance by the Central Bank of Nigeria, Cardoso said he hoped that high rates would not be for too long and discourage investment and production.
His words exactly “Hiking interest rates has had a dampening effect on the foreign exchange market, so that has begun to moderate. It’s not a zero-sum game. You lose on one side, you get on the other,”
Commenting on fluctuations in the naira in recent times, Cardoso said investors, who were likely to exit the economy in response to currency fluctuations, were now more comfortable with the market.
In closing, Cardoso said that the apex bank was going to return to orthodox monetary policies, saying, “Let’s face it: for a long period of time, the CBN did not embrace orthodox monetary policies. We want to go back to using an orthodox method, and it will take us to where we want to go.”
