CBN initiates reforms to combat soaring inflation, reflate economy

The Central Bank of Nigeria (CBN) under the leadership of Governor Olayemi Cardoso has embarked on significant reforms to address the country’s escalating inflation and rejuvenate the economy.

Governor Cardoso outlined his policy agenda at the Chartered Institute of Bankers of Nigeria’s 58th Annual Bankers’ Dinner and Grand Finale of the Institute’s 60th anniversary in Lagos last year. His plans aimed to bolster investor confidence, attract capital inflows, stimulate domestic investment, and enhance external reserves.

Among the challenges tackled was the backlog of foreign exchange demand, which had reached over $7 billion, leading to operational suspensions by foreign airlines like Emirate Airlines. By January, the CBN announced clearing $2 billion of this backlog and disbursing $61.64 million to affected foreign airlines.

Governor Cardoso recently announced the clearance of verified forex backlogs in all banks except five. He explained that significant efforts had been made to settle these obligations to alleviate pressure on the banking sector.

In response to escalating inflationary pressures, the Monetary Policy Committee (MPC) opted for a substantial policy rate hike during its recent meeting. Governor Cardoso highlighted the need to anchor inflation expectations and mitigate medium-term inflationary risks. The decision reflects the committee’s commitment to curbing inflation and stabilizing the exchange rate amidst market distortions and speculative activities.

Governor Cardoso emphasized the MPC’s dedication to addressing inflationary challenges and restoring stability to the economy. The decisions made during the meeting were guided by the committee’s assessment of prevailing economic conditions and the imperative to safeguard macroeconomic stability.