During the 30th Nigeria Economic Summit held in Abuja on October 15, 2024, the Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, called on Nigerians to prioritize economic fundamentals as the key to tackling the country’s rising inflation.
In a question-and-answer session, Cardoso highlighted the critical importance of restoring the foundational elements of Nigeria’s economy to ensure long-term stability. He explained that addressing the underlying issues is crucial before considering any trade-offs in monetary or fiscal policies.
“I see no substitute for the fundamentals of the economy. Before you start talking about trade-offs, we must agree that we have to get the fundamentals of the economy working,” Cardoso emphasized.
He pointed to the need for strong institutions, balanced supply-demand dynamics, and a resilient economic base as necessary components to stabilize the economy. Without these elements, he argued, short-term solutions would not be effective in the long run.
Cardoso also touched on the CBN’s recent monetary policy decisions, including increasing interest rates from 26.75% to 27.25% and adjusting the Cash Reserve Ratio (CRR). While acknowledging the debates surrounding these moves, he defended them as necessary steps to curb inflation, which he described as a serious threat to purchasing power and investment.
“Taming inflation is key because if you do not tame it, it can deter investment and significantly reduce purchasing power,” he warned.
Despite the challenges, Cardoso expressed cautious optimism that as inflation moderates, there would be room to lower interest rates, thus creating a more conducive environment for businesses to thrive.
In his final remarks, the CBN governor called for a collective effort to diversify Nigeria’s economy, especially to reduce its reliance on oil, and encouraged all stakeholders to work towards achieving a stable and prosperous economic future.