The Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, has defended the bank’s decision to raise the Monetary Policy Rate to 27.25 percent, describing it as a necessary move to control inflation and curb excess money in circulation. This statement was made in a press release from the apex bank on Sunday.
Speaking at the Harvard Club of Nigeria, Cardoso emphasized that while the rate hike may be tough on borrowers, it is crucial for the country’s economic stability. “Our decision to raise the Monetary Policy Rate to 27.25 percent was a bold move. Higher interest rates, while painful for borrowers, are necessary to curb excess money in circulation and control inflation,” he stated. “Leadership is about making hard choices to secure long-term stability over short-term comfort in moments like these.”
Cardoso highlighted the CBN’s focus on core objectives, such as containing inflation, restoring credibility, and building public trust in the financial system, as essential for meaningful recovery. He reflected on his tenure as CBN head, marking one year in office, and underscored the importance of trust in central banking. “Trust is the currency of central banking. If the public loses trust in the institution, the efficacy of its policies diminishes,” he said.
To enhance transparency and restore market confidence, Cardoso pointed to the introduction of the Electronic Foreign Exchange Matching System. “By enhancing transparency and providing more accurate oversight of forex transactions, we send a strong signal that the CBN is serious about fair and efficient markets,” he noted.
He also addressed the bank’s controversial decision to float the naira, which faced public criticism. Cardoso explained that this decision was necessary to align the official exchange rate with market realities and reduce speculative trading. He asserted that the move has begun to stabilize currency markets and mitigate speculative activities.
While acknowledging that the CBN has yet to fully achieve its inflation targets, Cardoso expressed optimism based on recent reports from the National Bureau of Statistics (NBS), which indicated a decline in inflation in July and August 2024. He stated that the bank’s policies are gradually steering the economy in the right direction, though challenges remain.
