CBN Governor Olayemi Cardoso Addresses Interest Rate Concerns
The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has assured Nigerians and private sector investors that the current interest rate of 30 percent will soon decrease.
Cardoso emphasized that the Monetary Policy Committee (MPC) of the CBN, not him, set the interest rate. He made this clarification while speaking at the Business CEO Forum in Lagos, stressing that the MPC bases its decisions on data, not emotions.
His comments come in response to concerns raised by notable figures such as Aliko Dangote, Chairman of Dangote Group, and Peter Obi, former presidential candidate of the Labour Party. At a recent National Manufacturing Policy Summit organized by the Manufacturers Association of Nigeria (MAN), Dangote criticized the high interest rate, stating, “At 30%, there is no way anybody can create jobs,” and arguing that it hampers economic growth. Peter Obi echoed these concerns, arguing that the 30 percent rate would stifle Micro, Small, and Medium Enterprises (MSMEs), as high credit costs and energy expenses burden private employers.
Cardoso explained that the decision to raise interest rates was influenced by factors such as money supply in the system, government interventions, and the Ways and Means balance. He noted that these factors led to the current economic situation and the need for higher interest rates.
“Sadly, we all witnessed a significant increase in money supply, with Ways and Means soaring to ₦27 trillion and government interventions reaching ₦10.5 trillion. These actions have consequences, which we are now experiencing,” Cardoso explained.
He further clarified that interest rates are determined by the MPC, a group of independent-minded individuals who base their decisions on data. Cardoso emphasized that the primary goal of the MPC is to control inflation, even if it means taking difficult measures.
“The MPC is aware that economic growth is crucial. If these rate hikes had not been implemented when they were, we might have seen further instability, especially with the naira-dollar exchange rate. However, these measures have helped stabilize the situation,” he said.
Cardoso expressed optimism that with the right policies, interest rates will decrease in the near future. “This high rate is not permanent. As we continue to implement effective policies, we can expect interest rates to come down,” he concluded.
