Nigeria’s inflation projected to drop to 21.4% in 2024, says CBN Governor

Addressing the House of Representatives in Abuja on Tuesday, January 06, 2024, Cardoso attributed the projected decline to the inflation-targeting policies of the Federal Government.

He explained that alongside governmental efforts, improvements in agricultural productivity and easing global supply chain pressures would contribute to reining in inflation.

“Inflationary pressures are expected to decline in 2024 due to the CBN’s inflation-targeting policy, aiming to rein in inflation to 21.4%,” Cardoso stated.

“This will be aided by improved agricultural productivity and easing global supply chain pressures.”

Cardoso elaborated on the CBN’s inflation-targeting framework, explaining the importance of clear communication and collaboration with fiscal authorities to achieve price stability.

He suggested that this approach could potentially lead to lowered policy rates, stimulating investment, and creating job opportunities.

Regarding the foreign exchange market, Cardoso acknowledged increased demand pressures leading to a continuous decline in the value of the Naira. Factors contributing to this situation, he noted, included speculative forex demand, inadequate forex supply due to non-remittance of crude oil earnings to the CBN, increased capital outflows, and excess liquidity from fiscal activities.

While acknowledging short-term volatilities attributed to arbitrage and speculation in the market-driven exchange rate system, Cardoso outlined a comprehensive strategy to address exchange rate volatility.

This strategy involves unifying FX market segments, clearing outstanding FX obligations, introducing new operational mechanisms for Bureaux De Change (BDCs), enforcing the Net Open Position (NOP) limit, and adjusting the remunerable Standing Deposit Facility cap.

Cardoso acknowledged that the steps taken might have a significant economic cost impact on the citizenry. However, he assured that these costs were temporary and that the decisions were aimed at addressing fundamental issues in Nigeria’s macroeconomic landscape.

“These measures, aimed at ensuring a more market-oriented mechanism for exchange rate determination, will boost foreign exchange inflows, stabilise the exchange rate, and minimize its pass-through to domestic inflation,” Cardoso concluded.

Get our Top Stories delivered to your inbox

Welcome to the Pulse Community! We will now be sending you a daily newsletter on news, entertainment and more. Also join us across all of our other channels – we love to be connected!