…Promises to reduce inflation to 21.4%
By Chinwendu Obienyi and Adanna Nnamani, Abuja
Central Bank of Nigeria (CBN) Governor, Dr Yemi Cardoso has said that the naira is currently undervalued and would be made to be at its real level soon.
This comes as experts diagnose the ailing Nigerian economy and proffer solutions, including plugging leakages, tackling insecurity and injecting sufficient foreign exchange to lubricate the economy.
Cardoso made the disclosure at the 2024 macroeconomic outlook launch hosted by the Nigerian Economic Summit Group (NESG) on Wednesday.
The CBN Governor said the monetary and fiscal wings of the country were deepening collaboration to administer policies and interventions that will accelerate genuine price discovery in the near term and also boost the economy.
He said CBN has reverted to the conventional monetary policy approach with a focus on achieving price stability, which fosters sustainable economic growth.
“We believe that the naira is currently undervalued and coupled with coordinated measures on the fiscal side, we will expedite genuine price discovery in the near term, this coordinated approach will contribute to a more balanced and stable exchange rate”, Cardoso said.
As part of his plans to grow the economy, Cardoso said the apex bank aims to rein in inflation to 21.4 percent in 2024.
In 2023, the inflation maintained an upward trend, peaking at 28.92 percent in December last year. That was the 12th consecutive rise in the country’s inflation rate.
Cardoso said despite the challenges, there was a silver lining as inflationary pressures are expected to reduce in 2024.
“Inflationary pressures are expected to decline in 2024 due to the CBN’s inflation-targeting policy, which aims to rein in inflation to 21.4%,” he said.
Cardoso said the target will be actualized by stimulating agricultural activities. He added that the gradual easing of global supply chain pressures will benefit businesses by boosting consumer confidence and purchasing power.
“The CBN adoption of the inflation-targeting framework involves clear communication, use of monetary policy instruments, and collaboration with fiscal authorities to achieve price stability, fostering market confidence and positively influencing consumer behaviour,” he said.
Cardoso also revealed that the CBN will partner with the Ministry of Finance and the Nigerian National Petroleum Corporation Limited (NNPCL) to increase the nation’s foreign reserves.
“We are pleased to note our collaboration with the Ministry of Finance and the NNPCL to ensure that all FX inflows are returned to the central bank. This coordinated effort will greatly enhance the bank’s FX flows and contribute to the accretion of reserves”, he said.
He added that the CBN has implemented a comprehensive strategy to improve liquidity in the country’s FX markets in the short, medium, or long term.
“Our focus is on addressing fundamental issues that have hindered the effective operation of our markets over the years. With the completion of an independent forensic review, we are addressing the backlog of valid FX transactions and we remain steadfast in our commitment to decisively address any infractions and abuses,” he said.
Speaking further, Cardoso said the apex bank will execute inflation-taming policies through monetary policy instruments and collaboration with the fiscal side of the economy, which is the Ministry of Finance, will be central to a successful execution.
He noted that the anticipated resumption of operations in the three refineries across the country will contribute to a reduction in the pump prices of PMS which is a major contributor to the Consumer Price Index (CPI) basket and added that the inflation outlook is geared towards increasing economic growth and a more predictive cost environment.