Monetary Policy Committee (MPC) Interest Rate May Remain High, Says Cardoso

The Governor of the Central Bank of Nigeria, Dr Olayemi Cardoso, has disclosed that the members of the Monetary Policy Committee would do whatever is necessary to tame the country’s high inflation.

This was disclosed by Cardoso in an interview with the Financial Times on Monday, indicating that interest rates would stay high for as long as necessary to tackle inflation.

He said, “They will continue to do what has to be done to ensure that inflation comes down."

The CBN’s hawkish stance on inflation became obvious from the first MPC meeting held in February when the committee raised the benchmark lending rate by 400 basis points to 22.75 per cent, from 18.75 per cent and reviewed upward to 24.75 per cent in March.

The next MPC meeting is scheduled to be held on May 20-21.

Despite the current CBN’s hawkish stance, Cardoso noted that he hoped that high rates would not be for too long and discourage investment and production.

He said, “Hiking interest rates obviously has had a dampening effect on the foreign exchange market, so that has begun to moderate. It’s not a zero-sum game. You lose on one side, you get on the other."

Speaking on fluctuations in the naira in recent times, Cardoso explained that investors, who were likely to exit the economy in response to currency fluctuations, were now more comfortable with the market.

He further expressed that the apex bank was going to return to orthodox monetary policies, saying, “Let’s face it: for a long period, the CBN did not embrace orthodox monetary policies. We want to go back to using an orthodox method, and it will take us to where we want to go.”