The Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, has defended the bank’s recent decision to raise the Monetary Policy Rate (MPR) to 27.25 percent, describing it as a necessary measure to combat rising inflation and reduce excess liquidity in the economy. This was stated in a press release issued by the apex bank on Sunday.
Addressing members of the Harvard Club of Nigeria over the weekend, Cardoso highlighted that while the increased rate may pose challenges for borrowers, it is essential for maintaining the country’s economic stability. He stressed that the CBN’s priority remains focused on key objectives such as controlling inflation, restoring the bank’s credibility, and rebuilding public trust in the financial system, all of which are critical for Nigeria’s economic recovery.
Cardoso’s remarks come as he reflects on his tenure, marking one year as the CBN Governor. He emphasized that trust is fundamental to central banking, and without it, the effectiveness of monetary policies would be severely weakened.
In addition to the rate hike, Cardoso pointed to the recent introduction of the Electronic Foreign Exchange Matching System as a significant step toward improving transparency and restoring confidence in the market. He also addressed the CBN’s decision to float the naira, which had been met with public skepticism. Cardoso explained that this decision was crucial to aligning the official exchange rate with market realities and curbing speculative trading.
He further asserted that the move has begun to stabilize the currency markets and reduce speculative activities. While acknowledging that the CBN has not yet fully achieved its inflation targets, Cardoso expressed optimism, citing data from the National Bureau of Statistics (NBS) that showed a decline in inflation rates in July and August 2024.
Despite ongoing challenges, the CBN governor remains hopeful, stating that the bank’s policies are gradually steering the economy in the right direction, even as more work remains to be done to solidify these gains.
