Nearly four months into his appointment as the governor of the Central Bank of Nigeira, Dr Olayemi Cardoso last week noted that the apex bank has launched a new five-year strategy that it will be running with from 2024 to 2028.
The strategy is expected to provide a clear roadmap for achieving its mandates as a central bank. Whilst the CBN Governor did not expatiate the details of the plan, he did mention that the strategy will be anchored on price stability and monetary policy effectiveness.
Also, he noted that a robust and resilient financial system will be the focus of the CBN under his tenure alongside governance, compliance and advisory to government. Cardoso whilst speaking at the Launch of the Nigerian Economic Summit Group (NESG) 2024 Macroeconomic Outlook Report said these will “form the pillars around which all our actions and activities will revolve.”
Stating that the apex bank under his leadership is committed rebuilding an institution that is trusted and respected and promoting confidence in the economy, he said the strategy will enable it to deliver on our mission “to ensure monetary, price and financial system stability as a catalyst for inclusive growth and sustainable economic development.”
Price stability refers to a condition where the general level of prices for goods and services experiences minimal fluctuations over time. This not only fosters economic predictability but also cultivates an environment conducive to sustainable growth and prosperity.
Presently, inflation figure which is the rate at which prices rise in Nigeria is heading towards 30 per cent with the figure for December last year standing at 28.92 per cent. Although analysts foresee a further rising inflation occasioned by the increasing food prices, insecurities and a weakening currency, the CBN governor seems optimistic that inflation will fall to around 21 per cent this year.
The tactic to achieve this according to him is price stability and effective monetary policy. Central banks implement monetary policies to control inflation and deflation, ensuring that the purchasing power of a nation’s currency remains steady.
By adjusting interest rates and employing other tools, central banks seek to strike a delicate balance that prevents runaway inflation while avoiding stifling economic growth. Price stability acts as a shield against economic uncertainties, shielding consumers, businesses, and investors from sudden and unpredictable price swings. When prices remain relatively constant, businesses can plan for the future with greater confidence, consumers can make informed purchasing decisions, and investors can allocate resources more effectively.
Cardoso had stated that inflationary pressures are expected to decline in 2024 due to the CBN’s inflation-targeting policy, which aims to rein in inflation to 21.4 per cent. “This will be aided by improved agricultural productivity and the easing of global supply chain pressures, benefiting businesses by boosting consumer confidence and purchasing power.
“The CBN’s adoption of the inflation-targeting framework involves clear communication, use of monetary policy instruments, and collaboration with fiscal authorities to achieve price stability, fostering market confidence and positively influencing consumer behavior.
“The outlook for decreasing inflation in 2024 will have a profound impact on businesses, providing a more predictable cost environment and potentially leading to lowered policy rates, stimulating investment, fueling growth, and creating job opportunities. Additionally, the Bank has reverted to the conventional monetary policy approach with a focus on attaining price stability, which fosters sustainable economic growth for Nigeria.”
