The Central Bank of Nigeria (CBN) has asserted that its series of interest rate increases over the past year has helped restore confidence in the naira. CBN Governor Olayemi Cardoso made this announcement during a press briefing following the Monetary Policy Committee’s (MPC) 297th meeting in Abuja, where the committee raised the Monetary Policy Rate (MPR) by 50 basis points from 26.75% to 27.25% in response to an inflation rate of 32.15%.
Since Cardoso’s appointment by President Bola Tinubu in September 2023, the MPC has increased the interest rate by a total of 8.5%, escalating from 18.75% to the current rate. Cardoso noted the significant depreciation of the naira, which has plummeted from about ₦700/$1 in September 2020 to over ₦1,600/$1.
When questioned about the effectiveness of the CBN’s monetary policies amid widespread economic hardship, Cardoso attributed the current economic challenges to the loose monetary policies implemented by his predecessor, Godwin Emefiele. He emphasized the substantial increase in money supply, which grew from ₦19 trillion in 2015 to ₦54 trillion in 2023, leading to excessive liquidity and inflationary pressures.
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Cardoso stated, “These multiple rate hikes have helped people to now begin to take a different look at their currency,” suggesting that confidence in the naira is gradually improving. He acknowledged the difficulties many Nigerians are facing but insisted that these measures are necessary for long-term economic stability.
“While these policies may impose short-term pain, they are essential to curbing excess liquidity, controlling high inflation, and attracting portfolio investors back to Nigeria,” he concluded.