CBN Governor Olayemi Cardoso made this statement during a press briefing on Tuesday, following the 297th meeting of the Monetary Policy Committee (MPC) in Abuja.

Cardoso announced the committee’s decision to raise the Monetary Policy Rate (MPR), which influences interest rates, by 50 basis points, from 26.75% to 27.25%, as part of efforts to control the inflation rate, currently standing at 32.15%.

President Bola Tinubu appointed Cardoso as CBN Governor in September 2023, following the removal of Godwin Emefiele. Cardoso’s appointment was swiftly confirmed by the Senate.

In the last year under Cardoso’s leadership, the MPC has raised the interest rate by 8.5%, from 18.75% in September 2023 to 27.25% a year later. During his tenure, the naira, which traded at around ₦700/$1 in September 2020, now sells for over ₦1,600/$1.

When asked whether the CBN’s monetary policies—including multiple interest rate hikes and the collapse of foreign exchange windows—were effective, given the economic difficulties Nigerians are facing, the CBN Governor attributed the country’s monetary situation to the policies of his predecessor.

“We inherited a situation where there was an excessive supply of money between 2017 and 2023, with liquidity being injected into the system.

“In 2015, the money supply stood at ₦19 trillion, and by 2023, it had ballooned to ₦54 trillion—a massive increase, largely driven by ways and means financing, essentially printing money. This surge resulted in an excessive amount of money chasing a limited supply of goods. It’s important to understand this context.”

He added: “Let’s not forget that the exchange rate was plummeting, and confidence in the currency was waning. We believe that these rate hikes have restored some faith in the Naira, giving people more incentive to hold onto it, unlike the situation we previously faced.”

Cardoso acknowledged the hardships many Nigerians are experiencing but expressed confidence in the bank’s current approach.

“These are short-term pains, but they will set the country’s economy on a path that will prevent the inefficiencies we’ve seen in the past. While the measures are tough, we have no choice but to implement them to rein in excess liquidity, combat high inflation, and attract portfolio investors who had previously left the market.”