Yemi Cardoso, governor of the apex bank, who took office in September 2023, announced these development following his chairing of the Monetary Policy Committee (MPC) meeting which ended on Tuesday.
Since taking office, Cardoso has hinted at a shift toward orthodox policies, marking a departure from his predecessor Godwin Emefiele, whose tenure stifled capital inflows into Africa’s largest economy.
According to Cardoso “Previous policy rate hikes have slowed the rise in inflationary pressure but not to a desirable extent.” “Members concluded that inflation could pose more regulatory challenges in the near and medium term if not effectively anchored.” According to him, non-monetary factors were driving inflation.
Nigeria’s inflation rate has surged to 29.90 percent, largely driven by the removal of fuel subsidy and a rapidly weakening currency that has lost around 50% of its value against the dollar after tight forex rules were relaxed in June.
Ramping up interest rates may not be enough to address inflation concerns, especially when Africa’s largest oil producer is confronted with foreign exchange shortages, resulting in a rapid depreciation of the local currency.
However, there remains optimism for positive outcomes with recent policy measures, such as the recent resumption of dollar sales to Bureau de Change operators aimed at stabilizing the naira.
