The Central Bank of Nigeria (CBN) has admitted that the inflation rate in the country is unacceptably high, but said there are signs its monetary policy will change the economic situation.
The CBN Governor, Olayemi Cardoso, stated this during the 2024 annual bankers dinner in Lagos organised by the Chartered Institute of Bankers of Nigeria (CIBN).
Nigeria’s headline inflation rate rose to 33.88 per cent in October from the 32.70 per cent recorded in September, according to the National Bureau of Statistics (NBS) report.
Cardoso expressed concern over the high inflation, hinting that there would be a downtrend in 2025.
“I fully recognise the challenges that higher interest rates impose on businesses and families. However, these measures are not intended to be permanent. We are closely monitoring the data and as inflation shows sustained signs of improvement, something we expect in the near future, we will adjust rates accordingly.
- Tax Reform Bills: Abbas, Barau must safeguard northern interests
- Convince opponents of tax reform with data – Dasuki
“Our tight monetary policy stance has altered the previous dire trajectory and we expect a downward trend in 2025. Inflation remains unacceptably high, but the signs are encouraging, particularly given that the full effects of monetary policy typically take six to nine months to impact the consumer sector,” he said.
The CBN governor also refuted the current exchange rate of dollar to naira, saying it did not reflect the true market value of the country.
He said, “It is also vital to address the disinformation circulating about a supposed demand supply gap in the FX market which is fueling unnecessary panic.
“The current US dollar exchange rate reflects the price that the most desperate buyers are willing to pay and this, in my view, does not represent the true market value of Nigeria,” he said.
He emphasised on the need for stability of the naira, saying the commission would introduce an electronic foreign exchange matching system.
“To further enhance the functionality of the foreign exchange market, we’re introducing an electronic FX matching system which has proven effective in other markets,” he said.
The CBN governor who was conferred a fellow of the institute alongside the Governor of Lagos State, Babajide Sanwo-Olu, expressed the commission’s commitment to maintain a robust cash buffer to meet the country’s needs.
The Chairman of the Chartered Institute of Bankers of Nigeria (CIBN), Prof. Pius Olanrewaju, said that 2024 had been an eventful year for the banking industry and the economy.
“For example, the Nigerian economy continues to be more resilient and agile as shown in the steady growth from 2.98 per cent in Q1 to 3.19 per cent in Q2 and now 3.46 per cent in Q3 of 2024.
“Likewise, the Nigerian banking industry has also shown resilience this year despite the macroeconomic pressures such as rising inflation, and exchange rate fluctuations, amongst others.
“The bank recapitalization exercise also attests to the fact that we are well on our way towards not only strengthening the financial sector but also supporting a $1 trillion economy envisaged by 2030,” he said.
Join Daily Trust WhatsApp Community For Quick Access To News and Happenings Around You.
