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Monday, July 8, 2024

CBN TO EASE RATE HIKES



The Central Bank of Nigeria (CBN) is expected to ease off on raising interest rates soon, according to Governor Dr. Olayemi Cardoso. This announcement was made on Saturday in Lagos during the unveiling of Ray Echebiri's book, *The Power of One Man: How Soludo's Consolidation Revolutionized Nigerian Banks into Global Competitors*.


Speaking on behalf of the CBN Governor, Deputy Governor of Financial Stability, Phillip Ikeazor, highlighted the importance of maintaining the current interest rate to mitigate the threat of hyperinflation and its impacts. Ikeazor stated, "Once you do not tame and control inflation and you get into hyperinflation, it takes you several years to get out of it. There is still a South American country with significant oil reserves that is in hyperinflation, and we are aware of the economic challenges there. Another East African country is also experiencing hyperinflation and struggling to overcome it."


Ikeazor emphasized the CBN's commitment to its core mandate of price stability, a stable exchange rate, and economic growth. He noted that avoiding hyperinflation is crucial because once it occurs, the effectiveness of monetary tools diminishes. He explained, "It is important that we tighten and hold on for a little while. In no distant future, we will be able to slow down on the rate hikes."


He further pointed out that while Western countries have raised rates to control inflation and maintained them for a long time, they have only recently stopped increasing rates without yet reducing them. "Once we can control and reverse galloping inflation, we will maintain the rates and eventually ease off on the rate hikes," he concluded.

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