Cardoso's First Year: Restoring Trust, Containing Inflation, Economic Stability Top CBN's Priorities

Samuel Mobolaji

As Governor Olayemi Cardoso marks his first year leading the Central Bank of Nigeria (CBN), he has outlined the institution’s key priorities: restoring trust, containing inflation, and ensuring economic stability.

Speaking at the Harvard Club of Nigeria in Lagos, Cardoso emphasized that the introduction of the Electronic Foreign Exchange Matching System (EFEMS) is a critical move to enhance transparency in Nigeria’s foreign exchange market.

“Trust is the currency of central banking,” he said. “If the public loses faith in the institution, the effectiveness of its policies is undermined. The EFEMS is designed to ensure more accurate oversight of forex transactions, signaling our commitment to fair and efficient markets.”

Cardoso highlighted the difficult decisions required in leading a central bank, noting that the CBN remains open to revisiting policies that do not meet their objectives. “In these challenging economic times, it is crucial to focus on our core objectives: restoring credibility, building trust in the financial system, and, most importantly, containing inflation,” he stated.

Reflecting on his leadership journey, Cardoso acknowledged the importance of credibility as a foundation for the bank’s actions. He cited the controversial decision to float the naira, which aimed to align the official exchange rate with market realities, as a step toward eliminating arbitrage and restoring trust in Nigeria’s financial markets.

“Credibility is earned through consistency,” he said, adding that although the move was unpopular, it demonstrated the CBN’s commitment to transparency and sound monetary policy. He noted that speculative trading had decreased, and stability was gradually returning to currency markets.

While inflation control remains a top priority, Cardoso admitted that the bank has yet to fully meet its target. However, recent data from the National Bureau of Statistics, showing declines in inflation for July and August 2024, suggest that the CBN’s strategies are making progress.

“Our decision to raise the Monetary Policy Rate (MPR) to 27.25 per cent was necessary. While higher interest rates are painful for borrowers, they are critical for reducing excess money in circulation and curbing inflation.”

Cardoso also underscored the importance of focused leadership. “In times like these, the temptation to take on too many initiatives must be resisted. The CBN’s core mandate is price stability, and we must prioritize that,” he said.

He added that clear and open communication is vital for maintaining trust. Transparency, such as publishing auction results and regularly updating economic data, has been central to the CBN’s efforts.

As Cardoso enters his second year in office, the bank’s focus on restoring trust, managing inflation, and maintaining economic stability will remain central to its strategy.