CBN’s MPC will complement fiscal activities to improve economy – Cardoso

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) will impact the growth of the Nigerian economy, central bank governor Olayemi Cardoso said on Monday.

Expressing concerns about the impact of previous MPC meetings on the economy, he said the MPC will complement the fiscal side and ensure that it moves the economy in the right direction.

The CBN in January announced the scheduling of the MPC meeting under the leadership of Mr Cardoso for 26 and 27 February. The announcement came six months since the last MPC meeting last July.

During the July 2023 meeting, the MPC opted to increase the benchmark interest rate, referred to as the Monetary Policy Rate (MPR), by 25 basis points, raising it from 18.50 percent to 18.75 percent.

“I was concerned that transmission was a question, and I didn’t want a situation where we started back on that same trajectory and it is for that reason that we took our time to ensure that as much as possible we can put ourselves in a position where the MPC will be impactful and complement the activities of the fiscal side and ensure that they are moving the economy in the right direction, signaling in the right direction,” Mr Cardoso said during an interview on Arise Television on Monday.

Expressing the need for synchronized efforts between monetary and fiscal authorities, Mr Cardoso explained the MPC’s crucial role in steering the economy in the right direction.

“Before the meeting, the MPC members will be announced, they are all independent-minded people which is very important for CBN and people who will make decisions in the best interest of the country without being emotional about the way those decisions are being taken,” he said.

Mr Cardoso expressed optimism about the CBN’s renewed emphasis on stabilising prices and controlling inflation.

READ ALSO: CBN increases interest rate to 18.5%

Acknowledging the widespread impact of inflation on livelihood, he identified the apex bank’s responsibility to make decisions that will effectively lower inflation and mitigate its consequences.

Silver lining
The International Monetary Fund had in its latest World Economic Outlook projected a reduction in Nigeria’s inflation rate, placing it at 23 per cent in 2024 and further decreasing to 15.5 per cent in 2025.

Daniel Leigh, IMF division chief of the research department, attributed this achievement to the CBN’s monetary tightening stance.

Referring to the forecast, Mr Cardoso said: “That is all as a result of the tightening that we are doing and one is extremely sensitive to the fact that this is an issue that we as a country need to get hold of and ensure that prices will come down and they become stable such that living wage is living wage.”

He noted that the reforms being implemented under the new administration have strengthened the confidence of foreign investors, leading to increased eagerness to return to Nigeria for investment opportunities.

“A lot of FPI are still interested in coming back to the country. They have taken a lot of methodical interest in understanding the reforms that have taken place and seeing how it is taking the country to the right direction.

“They also see rating agencies coming out with their own conclusions, of how they see the economy of the country progressing, it validate what they are thinking, we do additional reforms, it continues to please them,” he added

Foreign investments in Africa’s largest economy plummeted to $654.7 million in the third quarter of 2023, marking the lowest level since the National Bureau of Statistics (NBS) commenced data collation in 2013.

According to the NBS report, total capital importation into the country declined by 36.5 percent to $654.7 million in Q3 from $1.03 billion in the preceding quarter.