The Central Bank of Nigeria (CBN) recently announced that its series of interest rate hikes last year have significantly boosted Nigerians’ confidence in the national currency, the naira. CBN Governor Olayemi Cardoso shared this insight during a press briefing following the 297th meeting of the Monetary Policy Committee (MPC) in Abuja on Tuesday.

In a decisive move, Cardoso revealed the committee’s decision to raise the Monetary Policy Rate (MPR) by 50 basis points, increasing it from 26.75% to 27.25%. This step aims to combat the current inflation rate, which stands at a staggering 32.15%. Cardoso, appointed by President Bola Tinubu in September 2023 after the previous CBN governor, Godwin Emefiele, faced challenges, has overseen a significant adjustment in interest rates. Since his tenure began, the MPC has raised rates by 8.5%, up from 18.75% just a year ago.

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Under Cardoso’s leadership, the naira has faced substantial devaluation, trading at over ₦1,600 to $1, compared to around ₦700 to $1 in September 2020. During the briefing, when asked about the effectiveness of the CBN’s monetary policies amid ongoing economic struggles, Cardoso attributed the current challenges to the policies of his predecessor. He noted, “We inherited a very loose money supply situation between 2017 and 2023, which led to an influx of liquidity into the system.”

Cardoso emphasized the drastic increase in money supply from about ₦19 trillion in 2015 to ₦54 trillion in 2023, a change he described as “huge.” He explained that much of this increase was facilitated through various means, leading to excessive money chasing a limited amount of goods. “It’s crucial to understand this context,” he stated. “The exchange rate was escalating rapidly, and confidence in the currency was beginning to wane.”