CBN Targets 21.4% Inflation Rate for 2024
Amidst strong price instability, the Central Bank of Nigeria (CBN) has set a 21.4% inflation target for the year 2024, saying that the local currency, the naira, is relatively undervalued.
Inflationary pressures are expected to decline in 2024 due to the CBN’s inflation-targeting policy, which aims to rein in inflation to 21.4%,” CBN Governor Yemi Cardoso told an event Wednesday hosted by the Nigerian Economic Summit Group.
The apex bank had maintained an inflation-targeting policy of between 6-9% until policies somersault under ex-president Muhammadu Buhari worsened the price level in the country.
Cardoso faces pressure to raise interest rates when the committee holds a rate-setting meeting next month for the first time since he took office in September. Inflation in December hit 28.92%, its highest level in more than 27 years.
“Inflationary pressures are expected to decline in 2024 due to the CBN’s inflation-targeting policy, which aims to rein in inflation to 21.4%,” Cardoso said in a speech. He added that improved agricultural output and the easing of global supply chain pressures would boost consumer confidence and purchasing power.
Nigeria’s central bank is expected to pursue a more conventional monetary policy approach under Cardoso after years of unorthodox policies pursued by his predecessor, Godwin Emefiele. In November, Cardoso announced the adoption of an inflation-targeting framework.
President Bola Tinubu made a series of reforms after becoming head of state last year, including scrapping a petrol subsidy and easing currency trading restrictions. However, the country still has a shortage of forex and suffers as a result of a wide gap between the official and parallel market exchange rates.
“We believe that the naira is currently undervalued and, coupled with coordinated measures on the fiscal side, we will expedite genuine price discovery in the near term,” Cardoso said. “This coordinated approach will contribute to a more balanced and stable exchange rate.”
Cardoso said the CBN was trying to improve liquidity in the foreign exchange market, reiterating a pledge to clear outstanding FX obligations after paying at least $2 billion of the estimated $7 billion owed. #CBN Targets 21.4% Inflation Rate for 2024.
