Olayemi Cardoso, governor of the Central Bank of Nigeria (CBN) on Friday defended the postponement of the Monetary Policy Committee (MPC) meeting, saying it has satisfied the statutory requirement of meeting four times in a year.
“For the avoidance of doubt, the Central Bank of Nigeria Act 2007 requires that the meeting of the Monetary Policy Committee of the Bank holds at least four times a year, and the Bank has satisfied this requirement for 2023. Our focus has been on ensuring these meetings are useful and effective,” he said.
He said the CBN is confident that with continued tightening measures for the next two quarters, it will be able to effectively manage inflation.
“While absolute inflation is still rising, the declining rate of growth indicates progress.I am happy to report that our efforts over the past two months have begun to yield fruit,” he said.
The CBN’s efforts include using the regular Open Market Operations (OMO) to mop up excess liquidity from the banking system.
Consequently, an OMO auction was recently held with a stop rate of 17.5 percent for the one-year tenor, attracting oversubscription of N350 billion.
Cardoso said another round of OMO has been approved to further reduce excess liquidity.
Another efforts of the CBN which he said was bearing fruit was the offering of N108.1 billion worth of Treasury Bills with three tenors to the investing public, which according to him can help reduce liquidity in the banking system and support government fundraising.
He also noted the removal of the cap on the remunerable Standing Deposit Facility
(SDF) to increase activity in the SDF window and manage liquidity.
Other measures taken by the CBN to control liquidity include sustained Cash Reserve Requirement (CRR) debits, which have
moderated liquidity in September and October 2023;
Inauguration of a new liquidity management committee within the Bank that meets daily at 8am to assess liquidity conditions and ensure optimal levels.
He noted that liquidity in the entire banking sector has been significantly reduced to under N100 billion in November.
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“These measures have already started to yield results, as excess liquidity in the banking system has significantly reduced and the Overnight Bank Borrowing (OBB) rate has increased to a level consistent with the monetary policy program. Month-on-month inflation has also begun to decline, with a growth rate of 0.67 percent in October compared to 0.97 percent previously,” Cardoso said.
The CBN governor said he was aware that events over the past few years have also put the CBN in bad light. These issues can be attributed to various factors, such as corporate governance failures, diminished institutional autonomy of the Central Bank of
Nigeria, a deviation from the core mandate of the Bank, unorthodox use of monetary tools, an inefficient and opaque foreign exchange market that hindered clear access, a foray into fiscal activities under the cover of development finance activities. There was also a lack of clarity in the relationship between fiscal and monetary policies, among other challenges.
He noted that the CBN had strayed from its core mandates and was engaged in quasi-fiscal activities that pumped over 10 trillion naira in the economy through almost different initiatives in sectors ranging from agriculture, aviation, power, youth and many others.
“These clearly distracted the Bank from achieving its own objectives and took it into areas where it clearly had limited expertise”, he said.
He said under his leadership, Nigeria’s Central bank will vigorously address these issues.
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“We will tackle institutional deficiencies, restore corporate governance, strengthen regulations, and implement prudent policies. We assure investors and the business community that the economy will experience significant stability in the short-to-medium term as we recalibrate our policy toolkits and implement far-reaching measures,” he said.
