CBN Confident Of Disinflation As Apex Bank Holds Lending Rate

The Central Bank of Nigeria, CBN has promised that inflation will return to existing level in the country as soon as possible, blaming external factors for the rising cost of commodities and goods in the country.

CBN governor, Olayemi Cardoso made this known on Wednesday at the Monetary Policy Committee, MPC, meeting held in Abuja, the nation’s capital after the Committee’s decision to retain the Interest rate at 26.5 percent. The committee is the authority that regulates the benchmark interests rates in the country, and it’s made up of 11 members including the CBN governor who chairs it.

Cardoso while speaking to journalist after the meeting yesterday said all the members agreed on the decision to retain the old interest rate, set by the bank last month.

The development comes amid the rising cost of commodities in the country. The last time the interest rate was set, the inflation rate, according to the National Bureau of Statistics, NBS was 15.06, it has now moved up slightly to 15.38 amid fear that it can possibly move upward due to the war in the Middle east which has caused global rate inflation to spiral.

Due to the war, energy cost has ballooned globally, a situation that has had serious impact on other economic sectors, according to experts.

But Cardoso said the current situation is a temporary one that will fizzle out, insisting that the macro-economic policies in the country will reset the trend.

According to Cardoso, the MPC also agreed to retain other benchmarks including the Cash Reserve ratio, CRR for commercial banks at 45 percent.

He stressed that the impact of the global economic shock caused by the Middle east war has had insignificant impacts on the nation’s economy compared to pressures facing other economies.

“However, indications are that the impact of the crisis on the Nigerian economy has been minimal due to the benefits of prior policy reforms,” Cardoso stated, saying the CBN monetary policy has ensured that the impact on the Nigerian economy has been “mitigated.”

“These include exchange rate stability, improvements in external reserve buffers, strengthened monetary policy transmission, well-capitalised banking system, and ongoing fiscal consolidation, which have significantly bolstered the economy’s ability to absorb external shocks.

“As a result, the pass-through of global commodity and energy price shocks to domestic inflation has been significantly mitigated and would have been more pronounced in the absence of these reforms,” the CBN governor said.

“The MPC was therefore convinced that the essential conditions for price stability remain firmly in place.”