The Central Bank of Nigeria (CBN) has reiterated its determination to allow its Monetary Policy Committee (MPC) to continue to deploy conventional methods to tame the spiraling inflation in the economy.
The CBN governor, Olayemi Cardoso, who stated this during an interaction with Bloomberg in London on Tuesday, also shared key insights on the current state of the financial market, particularly on efforts to stabilise the Naira and stem spiraling inflation rates.
Cardoso noted a deceleration in the month-on-month inflation rates, highlighting it as a positive index in the continued growth of the country’s economy.
He assured that MPC members have remained vigilant in monitoring inflation trends and ensuring a moderation of inflation numbers.
“MPC members will continue to monitor the trajectory of inflation and are determined to ensure they put inflation under control”, he said.
While highlighting a period of stability following previous volatility in the foreign exchange market, the CBN governor 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 buying and selling sides, pointing out that in the past, people were panicking and front-loading their requests.
“Now, a lot of that has calmed down. There’s no inclination to do that because liquidity has returned to the market,” he said.
Cardoso also highlighted the significant achievement of merging different exchange rates into a more unified system.
“We had two different rates. Right now, we more or less have one rate. And we believe this is good, as it allows companies to plan,” he said, underscoring the importance of a predictable exchange rate for economic planning and investment.
Also, he expressed confidence in the current market dynamics, where willing buyers and sellers operate freely, noting that it had contributed to the stability of the Naira.
He, however, stressed the importance of continuous observation and management to ensure the market benefits all participants.
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.
Nigeria’s annual inflation rose to a 28-year high of 33.95% in May 2024. But the CBN said recent data from the National Bureau of Statistics reveals that the month-on-month inflation rate slowed for the third consecutive month, validating the effectiveness of its monetary policy tightening measures.
