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The Governor of the Central Bank of Nigeria, Dr. Olayemi Cardoso, has indicated that measures will soon be implemented to ease the upward trajectory of the benchmark interest rate.
Cardoso announced on Saturday in Lagos during the unveiling of a book called ‘The Power of One Man: How Soludo’s Consolidation Revolutionized Nigerian Banks into Global Competitors’, written by Ray Echebiri.
In order to mitigate the threat of hyperinflation and its resulting impacts, the Deputy Governor of Financial Stability, Phillip Ikeazor, speaking on behalf of the CBN governor, emphasized the significance of maintaining the current interest rate.
“Once you do not tame and control inflation and you get into hyperinflation, it takes you several years to get out of it. There is still a South American country that still has significant oil reserves but they are in hyperinflation and I think everyone is aware of what is happening in that economy. We have another country in East Africa which is also in hyperinflation. We know how hard they are struggling to get out of that.
“For us as a central bank, we are focusing on our core mandate of price stability, maintaining a stable exchange rate, and, of course, economic growth. But it is a question of sequencing. It is very important that we do not enter hyperinflation. Once you enter hyperinflation, the transmission of monetary economic tools will become completely ineffective. It is important that we avoid that.”
“That will be as long as we can control and can reverse galloping inflation. Once we can do that, then we maintain. We are all aware that in the Western world, we did have rate hikes to be able to control theirs and they maintained it for a very long time. It is only now that they have stopped rate hikes but they have not even started dropping the rates as we speak.
“It is important that we tighten and hold on for a little while and in no distant future, we will be able to slow down on the rate hikes,” he said.
