The Central Bank of Nigeria (CBN) will deploy every possible ‘orthodox’ strategy to tame inflation, Governor Olayemi Cardoso said on Tuesday, with a firm assurance that ongoing monetary tightening measures will begin to yield positive results early next year.
Cardoso spoke during a press conference in Abuja to announce the outcomes of the two-day meeting of the Monetary Policy Committee (MPC) which raised the Monetary Policy Rate (MPR) for the sixth time by 25 basis points to 27.50 percent. The rate raise is targeted at addressing rising inflation, which stood at 33.88 percemt as of October 2024.
“The Central Bank is resolute and committed to continuing to fight the war against inflation and there is no going back on that.
“We are going to deploy everything in our arsenal to ensure that we are able to tame it. And of course, this entails the return to orthodox monetary policies,” Cardoso stated amid agitations of rising interest rates on the economy.”
According to him, the Committee was unanimous in its decision to further tighten policy, though members took a decision to retain the asymmetric corridor around the MPR at +500/-100 basis points; Cash Reserve Ratio of Deposit Money Banks at 50 percent and Merchant Banks at 16 per cent; as well as the Liquidity Ratio at 30 percent.
Under Governor Cardoso, the CBN has raised the MPR six times in 2024. But inflationary pressures have renewed with the headline, food and core measures rising year-on-year in October 2024.
Data from the National Bureau of Statistics (NBS) showed that headline inflation (year-on-year) rose to 33.88 per cent in October 2024, from 32.70 percent in September.
On a month-on-month basis, it also rose to 2.64 percent in October 2024, from 2.52 percent in the previous month, with both the food and core components contributing to the continued rise in headline inflation.
Food inflation rose further to 39.16 percent in October 2024, from 37.77 per pcent in September, while core inflation also rose to 28.37 percent in October 2024, from 27.43 percent in September.
The Committee was particularly concerned that all three measures also inched up on a month-on-month basis, suggesting the persistence of price pressures, with attendant adverse impacts on income and welfare of citizens.
But Cardoso was optimistic that current measures would be able to tame prices in coming months due to lag effect.
“It is important for people to understand that there is a time lag between when you implement policies and when they have an impact. That time lag can be anything up from six to nine months to even a year. Our own perspective is that we expect to see greater results in the first quarter of 2025.”
He said in addition, that the apex bank is working very assiduously with some of the relevant agencies to ensure that structural impediments to growth are handled appropriately.
“We are ensuring that we are on top of the game, and that the foreign exchange market operates at its most optimal manner to reflect the true value of the currency, and of course we have price discovery.”
The governor, however, pointed out that current economic challenges are not peculiar to Nigeria, but global, as being discussed at various international fora.
“The road of travel is similar, these things take time and you need to stay the course to reap the benefit.
“The expectation globally is that Nigeria is on the right path and will continue to be as far as inflation and foreign exchange management is concerned.
“These are all time-bound issues, and we do expect that in the fullness of time we will begin to see the greater reaping of some of the benefits of the tightening and the sacrifices that everybody in the country has made.”
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