According to Julie Kozack, Director of the International Monetary Fund’s (IMF) Communications Department, the Central Bank of Nigeria (CBN), under its new management, is removing excess liquidity from the system, which has led to the nation’s high inflation rate.
She stated this at a press conference held at the agency’s Washington headquarters, where THE MATRIX was able to view the briefing’s transcript.
The next Monetary Policy Committee, which has been delayed twice this year under the present CBN leadership, should raise interest rates even higher, Kozack continued. “Inflation in Nigeria is running very high. It reached over 27 per cent in October, that is the year-on-year number.
The Central bank, under its new leadership, has started to withdraw excess liquidity that was in the system contributing to high inflation.
“The next Monetary Policy Committee meeting should further raise the policy interest rate. So, the Central Bank is taking action to try to address the high inflation problem.”
She also commented on the 2024 budget, stating that it “aims to reduce the fiscal deficit while also creating space for these priority spendings, both on the social side and also on the development side.”
In his keynote address at the 58th Annual Dinner of the Chartered Institute of Bankers of Nigeria (CIBN), the CBN Governor, Yemi Cardoso, stated his desire for monetary policies to lead to lower interest rates to drive up borrowing and investment in the real sector.
“Our monetary policies will aim to achieve price stability, foster sustainable economic growth, stabilize the exchange rate of the naira, and reduce interest rates to facilitate borrowing and investments in the real sector.” Cardoso
However, this appears to be a medium-term play as he also confirmed the apex bank will continue to squeeze liquidity as a monetary policy strategy to curb inflation.
“While absolute inflation is still rising, the declining rate of growth indicates progress. The CBN is confident that with continued tightening measures for the next two quarters, we will be able to effectively manage inflation.” Cardoso
The apex bank also set up a new liquidity management committee within the Bank
In his keynote address at the 58th Annual Dinner of the CIBN, Yemi Cardoso said that some of the previous failures of the CBN were tied to quasi-fiscal activities under the foray of “development finance activities.”
He added that through these activities, the CBN directly pumped over N10 trillion into the economy.
Cardoso said: “In line with our strategy to refocus on our core mandate, the CBN will discontinue direct quasi-fiscal interventionist activities and instead utilize orthodox monetary policy tools for implementing monetary policy.”
The CBN has also been making efforts to recover some of the loans granted under its intervention financing programmes, which have been marred by loan defaults.
