By Stephen Simon
Central Bank of Nigeria (CBN) Governor Olayemi Cardoso has signalled that the apex bank is in no hurry to begin cutting interest rates despite a sustained slowdown in inflation, saying global economic uncertainties continue to pose significant risks to the country’s inflation outlook. His remarks come ahead of the Monetary Policy Committee (MPC) meeting, where investors have been expecting signals of a possible shift in monetary policy.
Speaking at the BusinessDay Conference in Lagos, Cardoso said Nigeria had recorded nearly a year of disinflation, a development that had strengthened expectations that borrowing costs could begin to moderate. However, he cautioned that external shocks, particularly geopolitical tensions affecting global energy markets, had altered earlier projections for inflation.
The CBN governor explained that if not for recent global disruptions, the bank had anticipated inflation would decline to more moderate levels next year. He noted, however, that the changing international environment requires policymakers to remain vigilant in order to safeguard the gains already achieved through monetary tightening.
Cardoso defended the Monetary Policy Committee’s decision at its previous meeting to leave the benchmark interest rate unchanged, despite widespread expectations that the easing cycle might begin. According to him, the committee based its decision on economic indicators and data not readily visible to market participants.
He stressed that future monetary policy decisions would continue to be driven by economic data rather than market sentiment, insisting that the apex bank’s primary objective remains maintaining price stability and preserving confidence in the Nigerian economy.
The governor also credited the Federal Government’s economic reforms and the CBN’s monetary measures with improving Nigeria’s resilience against external shocks. He said the reforms had strengthened the country’s capacity to withstand global economic disruptions that might otherwise have significantly worsened domestic inflationary pressures.
Analysts say Cardoso’s comments suggest the CBN is likely to maintain its cautious monetary policy stance until there is stronger evidence that inflation is on a sustainable downward path. The Monetary Policy Committee is expected to weigh both domestic economic conditions and global developments before taking any decision on interest rates.
