On Thursday, the Central Bank of Nigeria’s (CBN) governor, Olayemi Cardoso, stated that the central bank’s goal is to reduce inflation to a single digit over the medium to long term.
Although the recently revised Consumer Price Index (CPI) shows a headline inflation rate of 24.48 percent year over year, reflecting the nation’s economic realities, he said this number is still much higher than what is considered acceptable.
Following evaluation, CBN will release the rebased CPI data conclusions. As a data-driven organization, he said, the apex bank is now analyzing the rebased statistics made public by the National Bureau of Statistics (NBS) and will share its conclusions when they are ready.
He gave a briefing on the decisions made by the Monetary Policy Committee (MPC), which met in Abuja on Wednesday and Thursday for the first time this year.
Cardoso said the committee unanimously maintained all parameters, including the asymmetric corridor surrounding the Monetary Policy Rate (MPR) at +500/-100 basis points and the MPR at 27.50 percent.
Additionally, the committee kept the Deposit Money Banks’ Cash Reserve Ratio (CRR) at 50% and the Merchant Banks’ CRR at 16%. The Liquidity Ratio remained unchanged at 30% as well.
He pointed out that recent macroeconomic developments, which are expected to impact price dynamics in the near to medium term favorably, justify the decision to hold interest rates.
These include the gradual stabilization of fuel prices and the stability of the foreign exchange market, which leads to an appreciation of the exchange rate.
The CBN is nonetheless worried about the possibility of further inflationary pressures, which are mostly caused by food prices.
“We will undoubtedly continue in that direction. We’ll be on the lookout. Nothing will be taken for granted. We think that the rate of inflation has been excessively high for too long.
“We want to make sure that we can reduce this from double digits to single digits in the medium to long term,” Cardoso said.
“We think the road of travel will be in that direction as we continue with the policies that we have embarked upon,” he added.
The governor underlined that closer coordination between fiscal and monetary authorities will be necessary to meet the single-digit inflation objective, particularly as improvements in different markets continue to advance.
He said, “I will deceive you by claiming that the fiscal and monetary systems would do it on their own. It won’t be. Coordination has always been important. But at no time can it be as important, in my view, as the situation we have now, because we can see change in a positive direction, and we need to not only maintain and hold but also improve it.”
Additionally, he pointed out that the recent Monetary Policy Forum, which effectively united monetary and fiscal authorities, signifies the start of this kind of cooperation and emphasizes the possible advantages of teamwork.
According to Cardoso, CBN reforms, including the new FX code and the Electronic Foreign Exchange Matching System (EFEMS), have steadied the naira, raised reserves to $39.4 billion by February 14, 2025, and improved investor confidence.
Over nine months’ worth of imports will be covered by the stockpiles.
Other reforms included abolishing margins on international interbank transactions, reducing round-tripping, and harmonizing the exchange rate to stabilise the foreign currency market and guarantee positive net foreign exchange flows.
The governor stated that as of the conclusion of the third quarter of 2024, the balance of payments had remained healthy, with a positive current account balance of US$6.06 billion.
