Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has rued the recent increase in the interest rate to 27.25 per cent but said though “painful” for borrowers, the decision is necessary to reduce excess money in circulation and effectively control inflation.
He stated this in an address to members of the Harvard Club of Nigeria in Lagos at the weekend.
“Our decision to raise the Monetary Policy Rate (MPR) to 27.25% was a bold move. Higher interest rates, while painful for borrowers, are necessary to curb excess money in circulation and control inflation,” he said.
Speaking on the theme: “Leadership in Challenging Times: Restoring Credibility, Building Trust, and Containing Inflation,” Cardoso acknowledged that the apex bank understands that leadership involves making difficult decisions aimed at ensuring long-term stability, rather than focusing on short-term comfort.
“Leadership is about making hard choices to secure long-term stability over short-term comfort in moments like these. Leading through challenging times means avoiding the temptation to take on too many initiatives. The Central Bank must focus on its core mandate—price stability. It is easy to become distracted by various political and economic pressures, but as a leader, one must prioritise,” Cardoso said.
He stated that the bank must remain focused on its core mandate of ensuring price stability, rather than being swayed by political and economic pressures.
The CBN chief explained that the focus of the new leadership at the CBN is rebuilding trust in the markets and the system, adding that the commitment is the reason behind the emphasis on policy transparency and the adoption of the Electronic Foreign Exchange Matching System (EFEMS) for foreign exchange transactions.
He said the efforts have led to a reduction in arbitrage and speculation in the market, as trust is gradually being restored among participants.
