The Central Bank of Nigeria (CBN) has announced that it will maintain the Monetary Policy Rate as a key strategy for managing inflation, which is one of its main priorities for 2025.
During the 59th annual bankers’ dinner organized by the Chartered Institute of Bankers of Nigeria in Lagos, CBN Governor Mr. Olayemi Cardoso shared this information with bankers, financial market leaders, business executives, and other economic stakeholders.
He emphasized that the CBN will utilize all available monetary tools to rein in inflation while focusing on price stability.
Cardoso noted that the Cash Reserve Ratio (CRR) and Open Market Operations (OMO) would be adjusted as necessary to ensure that liquidity levels in the banking system align with the CBN’s inflation objectives.
The Central Bank will also ensure a more transparent and efficient foreign exchange market that attracts investments into the economy, building on the reforms of market unification. The CBN Governor also announced that the Electronic FX Matching System will commence in December 2024.
He said,“ Exchange rate unification is a pivotal reform, but it marks just the beginning. Next week, the foreign exchange market will operate on the electronic FX matching system. This will further enhance transparency, restore confidence in the market, and attract new investments.”
The CBN Governor said that through a liquid and structured foreign exchange market, the target will be diaspora remittances, which can attract $1bn monthly inflows. This will be done by collaborating with banks and the Nigeria Inter-bank Settlement System (NIBSS).
Speaking further, he identified Financial Inclusion as another significant priority for the CBN. The target is 80% adult financial inclusion by 2026, which will be done in collaboration with banks and fintech firms.
Assessing the impact of the monetary policy reforms in the last year, Mr Cardoso acknowledged the challenge of the high cost of living that Nigerians were grappling with across the country.
On the 875-basis points hike, which put the monetary policy rate at 27.5% to curtail inflation, he said, “High interest rates are not intended to be permanent, and as inflation shows signs of deceleration in the future, the CBN will move on the interest rate. There are signs of reduction in 2025.”Real estate market trends
Looking at the unification of the FX market, he touted that it has enabled the CBN to clear outstanding FX obligations it inherited, giving critical sectors like manufacturing and aviation the confidence to invest. He tasked the banks with ensuring that the electronic FX matching system was effective for the market.
He expressed concerns over the delay in payment gateways settling transactions, affecting the vulnerable population. He called on the banks to strengthen their systems, as customers will be empowered from December 1st,2024, to report cases of failed transactions to the CBN.
The CBN Governor also stated that in 2025, financial Institutions will be required to refine their governance framework, and boards will be expected to champion the compliance culture.
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