Nigeria’s Central Bank of Nigeria (CBN) governor, Olayemi Cardoso, has stated that interest rates will remain high until the inflation rate subsides and orthodox policies will be implemented to tame inflation.
The CBN has swiftly transitioned to an “orthodox policy” following past scandals. It’s aim is to stabilize the situation after the tenure of Godwin Emefiele. Cardoso, a former Citigroup executive, said there was “every indication” that the monetary policy committee he chairs would “do whatever is necessary” to keep soaring inflation in check.
Inflation in Nigeria remains high at 33.2%, the highest in three decades. Food inflation is higher at 40%, a sharp blow to the living standards of poorer citizens. The central bank has been reoriented to focus on price and monetary stability. They’ve hiked rates by 400 and 200 basis points in February and March respectively, lifting the key lending rate to 24.75%.
Markets have generally welcomed the CBN’s stance under Cardoso. Investors have shown a “fundamental shift” and are getting more comfortable with the market. The official FX market has seen increased stability, further boosting investor confidence.
Cardoso remains hopeful that the elevated interest rates will not deter investment and production for an extended period.
