The cost of borrowing money from commercial banks, which has risen to more than 30 percent, is seen to moderate as monthly inflation has declined by 50 per cent in five months.
Olayemi Cardoso, governor of the Central Bank of Nigeria (CBN), said on Thursday that inflation, which is the price of goods and services, is beginning to moderate as month-on-month inflation has dropped by 50 percent.
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He said this during a fireside chat with Frank Aigbogun, publisher/chief executive officer of BusinessDay Media Limited, at the ongoing 2024 CEO forum, themed ‘Leadership in tough economic times.’
“Between February and now, the month-to-month inflation has decreased by 50 percent. I’m confident, in a not-too-distant future, things will begin to moderate,” he stated.
Since Cardoso became governor, the CBN has raised the Monetary Policy Rate (MPR) by 750 basis points to 26.25 percent in May 2024 from 18.75 percent in July 2023. Cardoso stressed that the MPR hikes were also timely, as monthly inflation declined by 50 percent between February and May.
“It was also a timely issue. It’s not something that I expect will remain with us forever. The ability to soak up the excess liquidity over time is important to the MPC.”
Regarding the FX backlogs, Cardoso stated that clearing it was one of his priorities as CBN governor to restore confidence and transparency to the economy.
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“When going through the Senate committee hearing, I told them my priority was to clear the backlog. So many people asked why I was doing that when I could use that money to grow the economy.”
“As a Bank, your yes must be yes. We were in a situation where Nigeria was in a state of crisis. Nigeria was in a state where there was a loss of confidence. So, clearing the backlog was a major step in building credibility. I was convinced that if we did not do that then, we would pay the price as a country,” he stated.
“When we came into the CBN, we found that there was a lot of disability in the system, for example, illicit flows and people not abiding by the rules. And it was important to put these in order.”
