At the presentation of Ray Echebiri’s book, “The Power of One Man: How the Soludo-Engineered Consolidation Transformed Nigerian Banks to Global Players,” on Saturday in Lagos, Cardoso made this statement.
The CBN governor stated that maintaining high interest rates was crucial to reducing the risk of hyperinflation and its aftereffects. Phillip Ikeazor, the CBN’s Deputy Governor of Financial Stability, was speaking on behalf of the governor.
“It takes several years to recover from hyperinflation once it is not contained and controlled,” he stated.
Though they are experiencing hyperinflation, there is still a South American nation with substantial oil reserves, and I believe that everyone is aware of what is going on there. We also have hyperinflation in another country in East Africa. We are aware of the difficulties they are facing in escaping that.
As a central bank, our primary goals are to preserve price stability, uphold a steady exchange rate, and, of course, promote economic expansion.
However, it comes down to sequencing. It is crucial that we avoid going into hyperinflation. The transmission of monetary economic tools will stop working entirely if hyperinflation sets in. It’s critical that we steer clear of it.
The regulator stated, “That will be as long as we can control and reverse galloping inflation,” when asked how long the rate increases would remain in place. We maintain after we are able to accomplish it.
As everyone knows, the West raised interest rates in order to regulate theirs, and they did so for a very long period. They have only recently ceased raising rates, but as of right now, they haven’t even begun to lower them.
“It’s critical that we tighten and hold on for a short while. We will be able to reduce the rate hikes in the not too distant future.”
Cardoso had declared in May that interest rate increases would continue until the inflation problem was resolved.
Cardoso stated that there was “every indication” that MPC will “do whatever is necessary” to control inflation in a Financial Times report.
“They will keep taking the necessary steps to guarantee a decrease in inflation. Let’s be honest: the CBN did not support traditional monetary policies for a very long time. He said, “We want to return to employing an orthodox strategy because it will get us where we want to go.
The headline inflation rate rose to 33.95 percent in May 2024 from 33.69 percent in April, according to the National Bureau of Statistics.
The benchmark lending rate was raised by the CBN’s Monetary Policy Committee in May, moving it up from 24.75 percent to 26.25 percent, or 150 basis points.
Olusegun Obasanjo, the previous president, had argued for the proper coordination of monetary and fiscal policies in order to establish economic stability and revolutionize the banking sector.
“The proper consultations between fiscal and monetary authorities are necessary to sustain this growth,” he declared.
Speaking through former Cross River governor Donald Duke, Obasanjo praised the bravery of Professor Chukwuma Soludo, the governor of Anambra State and a former governor of the CBN, in leading the 2005 banking sector consolidation, stating, “The consolidation initiated by Soludo was a courageous and necessary move.” It has made a major contribution to our banking sector’s expansion and stability.
While praising Soludo’s efforts, Lagos State Governor Babajide Sanwo-Olu also emphasized the present economic difficulties.
To lessen the strain on the private sector, he called on the CBN to act decisively to stabilize the economy, especially in controlling inflation and interest rates.
There are a number of economic difficulties facing the private sector at the moment. In order to stabilize the economy, the CBN needs to act quickly and decisively. We may navigate through these volatile times by drawing lessons from previous reforms, according to Sanwo-Olu.
In his speech, Soludo recalled the difficulties encountered during the 2005 consolidation, but he also expressed satisfaction with the outcome and asked the present CBN leadership to keep up their strong efforts to recapitalize the banks in order to stay up with the growing economy.
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