Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN), has emphasised that the decision to raise the Monetary Policy Rate (MPR) to 27.25 percent was necessary, despite the strain it puts on borrowers.
Speaking over the weekend in Lagos at an event hosted by the Harvard Club of Nigeria, Cardoso addressed the pressing issue of inflation and the measures the CBN is implementing to tackle it.
According to Cardoso, while the higher interest rates are “painful for borrowers,” they are essential in reducing excess liquidity in the economy, which is a key driver of inflation.
“Leadership is about making hard choices to secure long-term stability over short-term comfort in moments like these,” Cardoso said, reinforcing the bank’s commitment to achieving economic stability.
During his speech, titled “Leadership in Challenging Times: Restoring Credibility, Building Trust, and Containing Inflation,” Cardoso also highlighted the CBN’s recent efforts to enhance transparency in the financial system.
He pointed to the introduction of the Electronic Foreign Exchange Matching System (EFEMS), a platform aimed at providing more accurate oversight of foreign exchange (forex) transactions.
“Trust is the currency of central banking. If the public loses trust in the institution, the efficacy of its policies diminishes,” Cardoso said.
The EFEMS initiative, according to the governor, is part of the bank’s broader efforts to rebuild public trust and ensure fairness in Nigeria’s financial markets.
“By enhancing transparency and providing more accurate oversight of forex transactions, we send a strong signal that the CBN is serious about fair and efficient markets,” he added.
Cardoso further emphasized that leadership, particularly within the central banking sector, requires making difficult decisions, even when unpopular.
However, he stressed that the CBN remains responsive and willing to reconsider policies if they fail to achieve their intended outcomes. “The bank is a listening institution, unafraid to reconsider decisions if they fail to meet their original objectives,” he noted.
Despite the CBN’s efforts to control inflation, Cardoso acknowledged that the bank has not yet met its inflation target.
However, he pointed to recent data from the National Bureau of Statistics (NBS), which reported a slight decline in inflation rates in July and August 2024, as evidence that the bank is moving in the right direction.
“In the face of economic challenges, it is imperative to focus on core objectives—restoring the credibility of the institution, building trust in the financial system, and, most critically, containing inflation. These are not just strategic goals; they are foundational to any meaningful recovery,” Cardoso concluded.
As Nigeria continues to grapple with inflationary pressures, the CBN’s leadership remains focused on measures aimed at stabilising the economy and building a more trustworthy financial system.
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