By Adedapo Adesanya
The Governor of the Central Bank of Nigeria, Mr Yemi Cardoso, has hinted at a further hike in interest rates amid a continued jump in inflation which hit 34.19 per cent in June 2024.
The Monetary Policy Committee (MPC) is expected to meet for the fourth time this year next week on July 22-23, 2024.
In a foreword of the inaugural edition of the CBN’s Macroeconomic Outlook for Nigeria, Mr Cardoso implied that the monetary tightening policy will continue, probably until inflation cools off.
Mr Cardoso also highlighted several risks to Nigeria’s positive domestic outlook, noting that security challenges, supply-side shocks, and global geoeconomic fragmentation might exacerbate inflationary pressures.
These factors, coupled with long-standing structural imbalances, could necessitate extended monetary tightening, thereby depressing growth potential.
“The positive domestic outlook is, however, subject to certain risks, especially, as security challenges, supply-side shocks, and global geoeconomic fragmentation could aggravate inflationary pressures.
“Elevated inflation, due to long-standing structural imbalances, could extend monetary tightening and depress growth potentials.
“Oil theft, pipeline vandalism, and an unlikely decline in crude oil price could also constrain fiscal space, hamper foreign exchange receipts, lower accretion to the external reserves, heighten pressure in the foreign exchange market and undermine domestic stability,” he said.
He noted that improvements in domestic production and refining capacity of crude oil, along with anticipated rises in crude oil prices, are expected to boost growth from 2.74% in 2023 to 3.38% in 2024.
Although inflation remains elevated, it is projected to moderate to 21.40 per cent within a range of 19.84 to 25.35 per cent, down from 28.92 per cent in December 2023, as the transition to an inflation-targeting framework and a stringent monetary policy stance effectively anchor expectations.
The banker also noted that sustaining reforms to strengthen the foreign exchange market and tackling security issues around the food belt and oil installations would support any endeavours.
Mr Cardoso called on all government policy organs to foster policy harmonization and ensure robust synchronization of socio-economic measures, a move that would bolster domestic prosperity and uphold economic governance under a shared vision.