Dr. Olayemi Cardoso, the Governor of the Central Bank of Nigeria (CBN), indicated that the institution may soon slow down the increases in the benchmark interest rate. This announcement was made on Saturday in Lagos during the launch of Ray Echebiri’s book, “The Power of One Man: How the Soludo-Engineered Consolidation Transformed Nigerian Banks to Global Players.”
Represented by Phillip Ikeazor, the CBN’s Deputy Governor of Financial Stability, Cardoso emphasized the necessity of maintaining high interest rates to prevent hyperinflation and its severe consequences. “Once you do not tame and control inflation and you get into hyperinflation, it takes you several years to get out of it,” he warned, citing examples from South America and East Africa.
Cardoso outlined the CBN’s core mandate of ensuring price stability, maintaining a stable exchange rate, and fostering economic growth. He stressed the importance of preventing hyperinflation, which would render monetary policy tools ineffective. “It is very important that we do not enter hyperinflation,” he reiterated.
Addressing the duration of the rate hikes, Ikeazor stated, “That will be as long as we can control and can reverse galloping inflation. It is important that we tighten and hold on for a little while and in no distant future, we will be able to slow down on the rate hikes.”
Cardoso had previously asserted in May that the CBN would continue raising interest rates until inflation was under control. According to a Financial Times report, he emphasized the necessity of orthodox monetary policies to achieve this goal.
As reported by the National Bureau of Statistics, Nigeria’s headline inflation rate rose to 33.95% in May 2024 from 33.69% in April. In response, the CBN’s Monetary Policy Committee increased the benchmark lending rate by 150 basis points to 26.25%.
At the same event, former President Olusegun Obasanjo called for a synergy between fiscal and monetary policies to stabilize the economy. Represented by former Cross River Governor Donald Duke, Obasanjo praised the 2005 banking sector consolidation led by Anambra State Governor and former CBN Governor, Professor Chukwuma Soludo, as a critical step for the sector’s stability and growth.
Lagos State Governor Babajide Sanwo-Olu also commended Soludo’s efforts but highlighted current economic challenges. He urged the CBN to take decisive actions to stabilize the economy, particularly in managing interest rates and inflation to alleviate pressures on the private sector. “The private sector is currently experiencing tough times due to various economic challenges. The CBN must take swift and effective measures to stabilize the economy,” Sanwo-Olu stated.
In his remarks, Soludo reflected on the challenges of the 2005 consolidation, expressing pride in its achievements. He urged the current CBN leadership to remain steadfast in their efforts to recapitalize banks to support the growing economy.
