In an exclusive interview with Abebe Selassie, Director of the International Monetary Fund African Department, at the IMF/World Bank Spring Meetings in Washington DC, Central Bank of Nigeria Governor Yemi Cardoso shared insights into his vision for shaping Nigeria’s monetary policy, addressing FX challenges, and tackling inflation. Here are the key excerpts:
Building Trust Amidst Crisis: Cardoso emphasized the critical importance of trust, particularly in a period of crisis when inflation was high, and the exchange rate was under stress. He highlighted the need to rebuild confidence and trust deficit among stakeholders, both domestically and internationally.
Sequencing Reforms and Communication: He outlined the sequencing of reforms, prioritizing the restoration of orthodox monetary policy and communicating clear objectives to stakeholders. Cardoso stressed the significance of continuous dialogue and communication to ensure transparency and understanding of policy decisions.
Addressing Inflation and Expectations: Cardoso acknowledged the challenge of influencing expectations and price-setting behavior, particularly among the general populace. He emphasized the need for continuous dialogue and reinforcement of policy measures to moderate inflation.
Collaboration with Fiscal Authorities: Cardoso underscored the importance of collaboration with fiscal authorities, particularly in addressing inflation targeting objectives and fiscal deficits. He highlighted the need for a strong partnership to achieve sustainable fiscal policies.
Lessons Learned and Future Directions: Reflecting on his first six months in office, Cardoso emphasized the lessons learned, including the importance of consistency, humility, and effective communication. He stressed the need for credibility and trust-building to anchor successful monetary policy.
Market-driven Exchange Rate Policy: Cardoso clarified the central bank’s stance on defending the naira, emphasizing a shift towards a market-driven exchange rate regime. He highlighted the importance of a vibrant currency market and reduced intervention, aiming for a willing buyer, willing seller dynamic.
In conclusion, Cardoso reiterated the central bank’s commitment to market-led policies, transparency, and collaboration with fiscal authorities to achieve sustainable economic growth and stability in Nigeria.