Nigeria’s CBN governor keeps promising to tackle inflation but is light on details

Nigeria’s Central Bank governor, Olayemi Cardoso, expects headline inflation to decline to 21.4% in 2024 as the apex bank prepares for its first rate-setting meeting since July 2023.

Cardoso, who spoke at an event on Wednesday, said inflation will moderate “due to the CBN’s inflation-targeting policy.” He made a similar statement in December 2023, although the CBN’s strategy remains unclear. Decreasing inflation in 2024 would significantly impact businesses, provide “a more predictable cost environment,” and lead to “lower policy rates,” said Cardoso. He also argued this would stimulate investment, fuel growth, and create job opportunities.

The CBN is expected to raise interest rates at its next Monetary Policy Committee (MPC) meeting on February 26-27, 2024, even as headline inflation soared all through 2023 to a 27-year high of 28.9%, driven by food inflation. 

Under the acting CBN governor, Folashodun Shonubi, the bank raised interest rates twice. However, the new CBN governor took office last September and took a different approach, failing to call a rate-setting meeting in four months. His silence and lack of urgency has worried analysts and investors, particularly as the naira trades at some of its lowest levels amid a dollar shortage. Cardoso made his first policy speech as CBN governor last November at a gathering of bankers in Lagos, where he said monetary transmission mechanisms had rendered the rate meetings “largely ineffective.” 

Nigeria is expected to experience moderate inflationary pressures this year, the Nigerian Economic Summit Group (NESG), a think tank, said in its 2024 macroeconomic outlook. The report projects the country’s inflation rate to average 21.5% in 2024 compared with the estimated average of 24.5% in the previous year. This slowdown will be driven “by lower deficit monetisation structural, relative exchange rate stability and other heightened monetary measures by the Central Bank,” the report said.

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