Nigerian Central Bank Governor Olayemi Cardoso said the country’s tight monetary policy stance is helping to corral inflation and could soon open the door for interest rate cuts.
“To the extent that the right policies are used, and obviously with the results we’ve seen the right policies are being used, I believe that in the not-to-distant future, things will begin to moderate and interest rates will come down,” he said Thursday at an event in Lagos.
“Between February and May of this year the month-on-month rate of inflation has halved,” he said.
Nigeria is battling inflation that’s near a three-decade high following economic reforms last year that partially lifted popular fuel subsidies and eased foreign exchange controls, triggering a steep fall in the naira.
The CBN has hiked its monetary policy rate by 750 basis points since February, reaching 26.25 per cent in May, to help support the naira and fight inflation.
“If these hikes were not done at the time they were done, if you recall, naira to dollar was almost tipping over. This helped to stabilize things,” Cardoso said.
The next rate decision will be announced on July 23 following a meeting of the central bank’s monetary policy committee.
“Fiscal issues being moderated and the ability to soak up all the excess liquidity that we have in the system — and be able to balance things out over a period of time — that’s the important thing for the MPC,” he said.
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