Yemi Cardoso, Governor of the Central Bank of Nigeria (CBN), has cautioned that the CBN will keep interest rates high for longer if inflation does not ease up. He made this known in the foreword of the first edition of the CBN’s Macroeconomic Outlook for Nigeria, which the central bank recently published. This warning follows a recent report showing Nigeria’s inflation increased in June, the first rise since February 2024.
In the foreword, Cardoso pointed to risks like security issues, supply shocks, and global economic uncertainties that could worsen inflation. He also mentioned ongoing economic imbalances that might force the CBN to maintain tight money policies, which could slow economic growth.
Despite challenges, Cardoso expects Nigeria’s economy to grow from 2.74 per cent in 2023 to 3.38 per cent in 2024. According to him, this would be due to improvements in oil production and higher oil prices.
He predicts inflation will drop to around 21.40 per cent, down from 28.92 per cent in December 2023, due to new policies and strict monetary actions.
To manage risks, Cardoso stressed the need for continued tight money policies, reforms in the foreign exchange market, and better security in critical sectors. The next Monetary Policy Committee meeting, scheduled for July 22nd and 23rd, 2024, is expected to decide on further actions, given the current high inflation rate of 34.19 per cent.
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