By Adedapo Adesanya
The Governor of the Central Bank of Nigeria (CBN), Mr Yemi Cardoso, has expressed optimism that the various tools deployed by the lender to tame inflation and create a stable foreign exchange market would yield the needed results soon.
He said after announcing the hiking of the benchmark interest rate, the Monetary Policy Rate, MPR, by 150 basis points to 26.25 per cent from 24.75 per cent on Tuesday in Abuja, the third raise in less than three months as part of efforts to rein in inflation and achieve price stability.
However, the apex bank retained the Cash Reserve Ratio (CRR) for deposit money banks at 45 per cent and the Liquidity Ratio at 30 per cent.
While he emphasised that the CBN won’t relent on efforts to bring down the figure which stood at 33.69 per cent as of April 2024, Mr Cardoso added there was no magic wand.
Recall that the country has set a target of 21.4 per cent and it also expects that inflation will begin to decelerate by May 2024.
Nigeria’s stubborn inflation has sustained an upswing for 16 straight months hitting 33.69 per cent year-on- year as of April, fuelled by food inflation, which is over 40 per cent.
Mr Cardoso noted that despite pressure from food inflation, the general inflation rate was “moderating”, pointing out that “the tools the central bank is using are working”.
“I have several times and will say again, there is no magic wand. These are things that need to take their time.
“I am pleased and confident that we are beginning to get some relief and in another couple of months we will see the more positive outcomes from the central bank have been doing”.
“The committee thus reiterated several challenges confronting the effective moderation of food inflation to include rising costs of transportation of farm produce, infrastructure-related constraints along the line of distribution network, security challenges in some food producing areas, and exchange rate pass-through to domestic prices for imported food items.
“The MPC urged that more be done to address the security of farming communities to guarantee improved food production in these areas,” he emphasised.
The apex bank chief also said investors’ confidence in the country was growing, adding, “We have attempted to make the market more transparent in our dealings which foreign portfolio investors want to see and which gives them the added confidence.
“We have seen that they have responded very positively to the transparency initiatives and that has given a considerable amount of confidence to them.
“The removal of the distortions that we all know about which over time have resulted in a multiplicity of different circulars to address certain things have also helped in no small measure to boost confidence in the sector”.