The Governor of the Central Bank of Nigeria (CBN), Yemi Cardoso, has said that persistent inflation could prolong monetary tightening measures and hinder the nation’s growth potential.
The Central Bank of Nigeria (CBN) has said that persistent inflation could prolong monetary tightening measures and hinder the nation’s growth potential.
The CBN Governor, Yemi Cardoso, made this known in the foreword of the inaugural edition of the CBN’s Macroeconomic Outlook for Nigeria, recently released by the apex bank.
Based on this foreword, the central bank governor noted that the apex bank could continue with its hawkish monetary policy, which is underpinned by higher interest rates, if inflation continues to rise.
This outlook containing this foreword comes a few days after the National Bureau of Statistics (NBS) released the CPI report, which indicates that the inflation rate ticked higher for the month of June and rose month on month for the first time since February 2024.
Cardoso further highlighted several risks to Nigeria’s positive domestic outlook. He noted that security challenges, supply-side shocks, and global geoeconomic fragmentation might exacerbate inflationary pressures.
These factors, coupled with long-standing structural imbalances, could necessitate extended monetary tightening, thereby depressing growth potential.
He said: “The positive domestic outlook is, however, subject to certain risks, especially, as security challenges, supply-side shocks, and global geoeconomic fragmentation could aggravate inflationary pressures.
“Elevated inflation, due to long-standing structural imbalances, could extend monetary tightening and depress growth potentials.
“Oil theft, pipeline vandalism, and an unlikely decline in crude oil price could also constrain fiscal space, hamper foreign exchange receipts, lower accretion to the external reserves, heighten pressure in the foreign exchange market and undermine domestic stability.”
Despite existing challenges, the outlook for Nigeria’s economy remains broadly resilient, with continued growth, expected moderation of inflation, and greater exchange rate stability, according to the CBN governor.
Similarly, the Apex bank has approved the sale of foreign exchange (FX) to eligible bureau de change (BDC) operators at N1,450 per dollar to meet the demand for invisible transactions.
In a statement yesterday signed by A.A Mahdi, CBN’s acting director of trade and exchange department, the apex bank said it has observed the continued distortions in the retail end of the market, which is feeding into the parallel market and further widening the exchange rate premium.
“Following the on-going reforms in the foreign exchange market, with the objective of achieving an appropriate market determined exchange rate for the Naira, the Central Bank of Nigeria (CBN) has observed the continued distortions in the retail end of the market, which is feeding into the Parallel market and further widen the exchange rate premium,” CBN said.
“To this end, the CBN has approved the sales of FX to eligible Bureau De Change (BDCs) to meet the demand for invisible transactions.
“The sum of $20,000 is to be sold to each BDC at the rate of N1,450/$ (representing the lower band of the trading rate at NAFEM in the previous trading day).”
According to the apex bank, all BDCs are allowed to sell to eligible end-users at a margin not more than 1.5 percent above the purchase rate from CBN.
The financial regulator instructed all eligible BDCs to make naira payments to CBN’s naira deposit account numbers and submit confirmation of payment with other necessary documentation for disbursement at the appropriate CBN branches in Abuja, Akwa, Kano and Lagos.
