The Central Bank of Nigeria (CBN) has acknowledged that the country’s inflation rate is alarmingly high, but indicated that there are indications its monetary policy may improve the economic landscape. CBN Governor Olayemi Cardoso made this statement at the 2024 annual bankers dinner in Lagos, hosted by the Chartered Institute of Bankers of Nigeria (CIBN).
According to a report from the National Bureau of Statistics (NBS), Nigeria’s headline inflation rate increased to 33.88 percent in October, up from 32.70 percent in September.
Cardoso expressed his worries regarding the elevated inflation, suggesting a potential decline in 2025. He stated, “I fully recognize the challenges that higher interest rates create for businesses and families. However, these measures are not meant to be permanent. We are closely monitoring the data, and as inflation shows consistent signs of improvement, which we anticipate in the near future, we will adjust rates accordingly.”
He added, “Our strict monetary policy has changed the previous negative trend, and we expect a downward shift in 2025. While inflation remains unacceptably high, the signs are promising, especially considering that the full impact of monetary policy usually takes six to nine months to affect the consumer sector.”
The CBN governor also disputed the current dollar to naira exchange rate, claiming it does not accurately reflect the true market value of the country. He remarked, “It is crucial to address the misinformation regarding a supposed demand-supply gap in the foreign exchange market that is causing unnecessary panic. The current exchange rate of the US dollar reflects what the most desperate buyers are willing to pay, which, in my opinion, does not represent Nigeria’s true market value.”
He stressed the importance of stabilizing the naira and announced that the commission would implement an electronic foreign exchange matching system. “To further improve the functionality of the foreign exchange market, we are introducing an electronic FX matching system that has proven effective in other markets,” he stated.
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The CBN governor, who was honored as a fellow of the institute alongside Lagos State Governor Babajide Sanwo-Olu, reaffirmed the commission’s commitment to maintaining a strong cash buffer to meet the country’s needs. Prof. Pius Olanrewaju, Chairman of the Chartered Institute of Bankers of Nigeria (CIBN), noted that 2024 has been a significant year for both the banking sector and the economy.
He highlighted, “For instance, the Nigerian economy has shown resilience and agility, with steady growth from 2.98 percent in Q1 to 3.19 percent in Q2, and now 3.46 percent in Q3 of 2024. Similarly, the Nigerian banking sector has demonstrated resilience this year despite macroeconomic challenges such as rising inflation and exchange rate volatility. The bank recapitalization initiative also indicates that we are progressing towards not only strengthening the financial sector but also supporting a $1 trillion economy projected for 2030.”
