By Adedapo Adesanya
The Governor of the Central Bank of Nigeria (CBN), Mr Yemi Cardoso, has blamed the high amount of liquidity in the financial system within a short time for the rising inflation in the country.
Speaking at the 296th Monterey Policy Committee (MPC), Mr Cardoso said, “When you print money on ways and means it has its consequences, and we are paying for those consequences right now, unfortunately, unfortunately, we all witnessed a situation where money supply trajectory got out of hand.”
The MPC had on Tuesday raised the country’s baseline interest rate by another 50 basis points to 26.75 per cent while adjusting the asymmetric corridor around the MPR to +500/-100 from +100/-300 basis points; and retained the Cash Reserve Ratio (CRR) of commercial banks at 45 per cent.
This came as Nigeria’s inflation hit 34.19 per cent in June 2024, a consecutive 18-month increment.
Explaining how this happened, he said, “And let’s not forget that this was largely as a result of a tremendous amount of liquidity that came into the system in a relatively short space of time.
“Okay, when you print money on ways and means it has its consequences, and we are paying for those consequences right now, unfortunately, we all witnessed a situation where [the] money supply trajectory got out of hand.”
Mr Cardoso explained that despite the rising inflationary impact on the economy, it will take necessary measures to bring the nation’s rising inflation under control.
He admitted that inflation was really and truly having a major impact on our economy as purchasing power was getting eroded and people were being pushed into different categories of poverty.
“And it is in their own interest that we are able to tame the scourge of inflation. If not, the ramifications will also be for them. It’s not on the average man, you know, it’s also before them. And we understand the need for growth,” he said.
“And we also understand that it is relatively challenging. When you have high interest rates, we also understand that, and quite frankly, my belief is that it is so fundamental to the long-term future, and stability of our economy, that inflation should be brought under control that in the short term, these are pains, which ultimately will be able to help our economy and help the manufacturing businesses as well.”
