Olayemi Cardoso, Governor of the Central Bank of Nigeria, stated on Wednesday that the bank wanted to see the country’s naira strengthen and inflation drop to roughly 21%.
Cardoso stressed in a speech, a copy of which the central bank shared by email, that “inflationary pressures are expected to decline in 2024 due to the CBN’s inflation-targeting policy, which aims to rein in inflation to 21.4%.”
He continued by saying that increased agricultural output and less strain on the world supply chain would increase consumer confidence and purchasing power.
For the first time since he assumed office in September, the CBN will be under pressure to raise interest rates at its rate-setting meeting next month. Following years of unconventional monetary policy initiatives by his predecessor, Godwin Emefiele, the bank is anticipated to adopt a more conventional approach under Cardoso.
“We believe that the naira is currently undervalued, and, coupled with coordinated measures on the fiscal side, we will expedite genuine price discovery in the near term,” Cardoso said. “This coordinated approach will contribute to a more balanced and stable exchange rate.”
Reiterating its promise to settle outstanding foreign exchange obligations after paying at least $2 billion of the $7 billion owed, Cardoso stated that the CBN was working to increase liquidity in the foreign exchange market.
After taking office as president last year, Bola Tinubu implemented a number of reforms, such as eliminating the petrol subsidy and loosening regulations on currency trading. However, the nation continues to face a foreign exchange shortage and suffers from a significant discrepancy between the official and black market exchange rates.
December saw a sharp increase in food prices, which contributed to Nigeria’s worst inflation in almost 27 years. Consumer inflation grew in December for the 12th consecutive month, according to data from the National Bureau of Statistics (NBS). In November, it was 28.20% year over year, but in December, it was 28.92%.