On Monday, the governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, revealed why interest rates would remain high.
According to the CBN, interest rates will never go down until the inflation rate comes down.
The CBN governor, who made the revelation in a Financial Times report, also disclosed that orthodox policies would be implemented to tame inflation.
News About Nigeria reports that, in March, Nigeria’s inflation rate rose to 33.20 percent from 31.70 percent in February.
The CBN’s monetary policy committee (MPC) then raised the interest rate by 200 basis points in March to 24.75 percent.
In the Financial Times report, Cardoso noted that there is “every indication” that the MPC will “do whatever is necessary” to bring down inflation.
The CBN governor said, “They will continue to do what has to be done to ensure that inflation comes down. Let’s face it: for a long period of time, 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.”
Cardoso also revealed that the official window of the foreign exchange (FX) market has been stabilised.
He further noted that high interest rates would not linger for too long and would act as a disincentive to investment and production.
“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,” he said.
