Governor Olayemi Cardoso of Nigeria’s central bank outlined the institution’s goals on Wednesday, aiming to reduce inflation to approximately 21% while bolstering the country’s undervalued currency, the naira.
Cardoso, who assumed office in September, faces mounting pressure ahead of the Central Bank of Nigeria’s upcoming rate-setting meeting.
In December, inflation soared to 28.92%, marking its highest level in over 27 years. Cardoso addressed this challenge, stating that inflationary pressures are anticipated to ease in 2024, underpinned by the central bank’s inflation-targeting policy, which aims to cap inflation at 21.4%.
Highlighting factors such as improved agricultural output and the alleviation of global supply chain disruptions, Cardoso expressed optimism regarding enhanced consumer confidence and purchasing power.
Under Cardoso’s leadership, the central bank is expected to transition towards a more conventional monetary policy approach, departing from the unorthodox policies of his predecessor, Godwin Emefiele.
In November, Cardoso announced the adoption of an inflation-targeting framework.
President Bola Tinubu, who assumed office last year, initiated several reforms, including the elimination of a petrol subsidy and relaxation of currency trading restrictions.
Despite these efforts, Nigeria continues to grapple with forex shortages and a significant disparity between official and parallel market exchange rates.
Cardoso emphasized the current undervaluation of the naira and pledged coordinated measures, alongside fiscal policies, to facilitate genuine price discovery, fostering a more balanced and stable exchange rate.
Additionally, the central bank endeavors to enhance liquidity in the foreign exchange market, reiterating commitments to clearing outstanding FX obligations, having already disbursed $2 billion of the estimated $7 billion owed.
