CBN will retain high interest rates to tame inflation — Cardoso

Governor Olayemi Cardoso of the Central Bank of Nigeria (CBN) isn’t pulling any punches in the fight against soaring inflation, hinting at maintaining high interest rates until prices stabilize. With inflation hitting a three-decade high at 33.2%, and food prices soaring even further at 40%, Cardoso assures the public that the CBN is ready to take whatever measures necessary to rein in the skyrocketing costs.

In a recent interview with the Financial Times, Cardoso emphasized the Monetary Policy Committee’s unwavering commitment to curbing inflation. He pointed out the necessity of reverting to orthodox monetary policies after a period of unconventional approaches, signaling a shift towards price and monetary stability.

Under Cardoso’s leadership, the CBN has already implemented significant rate hikes, lifting the lending rate to 24.75%. While some sectors applaud these measures as essential for economic stability, others voice concerns about the impact on businesses and investment.

International economists like Razia Khan of Standard Chartered Bank endorse Nigeria’s return to orthodox policies, likening them to strategies endorsed by the IMF. However, domestic analysts like Dumebi Oluwole from Stears stress the structural nature of Nigeria’s inflation, citing issues like insecurity hindering food production.

Despite the mixed reactions, Cardoso remains optimistic, hoping that high rates won’t deter investment and production for too long. He acknowledges the challenges, attributing the stubborn inflation to external factors like high food prices beyond the CBN’s immediate control.

As Nigeria navigates through these economic challenges, all eyes are on the CBN’s next moves, with questions lingering about the longevity of high interest rates and their impact on inflation and economic growth.