Olayemi Cardoso, governor of the Central Bank of Nigeria (CBN),** has highlighted the severe impact of inflation, noting that it is driving Nigerians into various levels of poverty.
Cardoso made these remarks during a press briefing following the monetary policy committee (MPC) meeting in Abuja on Tuesday. He underscored the critical need to control inflation for the benefit of Nigerians, emphasizing its adverse effects on the economy, including reduced purchasing power and rising poverty levels.
Cardoso stressed that addressing inflation is crucial not only for individuals but also for the organized private sector, which is also facing significant challenges. He acknowledged the necessity for economic growth but also recognized the difficulties posed by high interest rates, which are implemented to manage inflation and secure long-term economic stability.
“I want to highlight that inflation is significantly impacting our economy,” Cardoso stated. “It is eroding purchasing power and pushing people into various poverty brackets. Controlling inflation is essential for everyone, including the private sector, which also feels the effects.”
He expressed that while managing inflation comes with short-term difficulties, these measures are vital for the long-term stability of the economy and the manufacturing sector.
Cardoso also discussed the effects of recent liquidity influx into the system, attributing some of the economic pressures to excessive money printing through ways and means advances. He noted that this led to a problematic money supply trajectory, prompting the need for higher interest rates to stabilize the situation.
In the MPC meeting, interest rates were raised by 50 basis points to 26.75 percent, up from 26.25 percent. This adjustment aims to manage money supply and counteract inflation. The MPC also adjusted the asymmetric corridor to +500 and -100 basis points around the MPR and maintained the cash reserve ratio (CRR) at 45 percent and the liquidity ratio at 30 percent.
Cardoso noted that Nigeria’s inflation rate had surged to 34.19 percent last week, largely driven by rising food prices, which further emphasizes the need for stringent measures to control inflation.
(cable)