Central Bank of Nigeria reveals its inflation target figure

In his first public address on the economy since November, Central Bank of Nigeria (CBN) Governor Olayemi Cardoso has predicted a decline in inflation this year, aiming to bring it down to 21.4% through the bank’s new inflation-targeting policy.

“Inflationary pressures are expected to decline in 2024 due to the CBN’s inflation-targeting policy, which aims to rein in inflation to 21.4%,” Mr Cardoso told an event Wednesday hosted by the Nigerian Economic Summit Group.

“The outlook for decreasing inflation in 2024 will have a profound impact on businesses, providing a more predictable cost environment and potentially leading to lower policy rates, stimulating investment, fuelling growth and creating job opportunities,” he said via video link.

This promise follows his November speech, where he pledged sweeping reforms, including a shift to inflation targeting. However, his relative silence since then has drawn criticism for a lack of communication.

With inflation hovering near a 30-year high of 28.9% in December, the pressure is on the CBN to act. The monetary policy committee is expected to raise interest rates sharply at its upcoming meeting, the first since July’s hike to 18.75%.

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Mr Cardoso acknowledged the challenges, attributing the cost-of-living crisis to economic reforms implemented last year. These measures included a more flexible exchange rate and the removal of fuel subsidies. While lauded by international investors, they have caused hardship for many Nigerians and contributed to the currency’s depreciation.

Adding to the concerns, Mr Cardoso declared the naira “currently undervalued.” He expressed confidence that “coupled with coordinated fiscal measures, genuine price discovery will be expedited in the near term.”

This statement hints at potential adjustments to the foreign exchange regime, a sensitive issue with significant economic implications.