“Nigeria’s Central Bank Strategizes to Tackle Soaring Inflation and Currency Challenges”Thank you for reading this post, don't forget to subscribe!
ABUJA, Jan 24 – Governor Olayemi Cardoso of the Central Bank of Nigeria (CBN) articulated the bank’s commitment to curbing inflation and fortifying the undervalued naira currency. With inflation reaching a staggering 28.92% in December, the highest in over 27 years, Cardoso faces mounting pressure to make critical decisions during the upcoming rate-setting meeting, the first since assuming office in September.
“Inflationary pressures are anticipated to ease in 2024, driven by the CBN’s inflation-targeting policy aiming to stabilize inflation at 21.4%,” remarked Cardoso in a speech shared by the central bank via email. He emphasized that enhanced agricultural output and relief from global supply chain pressures would contribute to increased consumer confidence and purchasing power.
Cardoso’s tenure signifies a shift towards a more conventional monetary policy approach, departing from the unconventional strategies of his predecessor, Godwin Emefiele. The adoption of an inflation-targeting framework in November sets the tone for a recalibrated approach.
President Bola Tinubu’s reforms, including the removal of a petrol subsidy and relaxation of currency trading restrictions, have been implemented since assuming office last year. However, Nigeria grapples with a forex shortage, leading to a substantial gap between official and parallel market exchange rates.
Cardoso expressed confidence in the undervalued naira, anticipating that coordinated measures on the fiscal side would expedite genuine price discovery, contributing to a more balanced and stable exchange rate. The CBN aims to enhance liquidity in the foreign exchange market, with a commitment to clearing outstanding FX obligations, having already paid at least $2 billion of the estimated $7 billion owed.