The Central Bank of Nigeria (CBN) says its multiple interest rate hikes last year have helped boost Nigerians’ confidence in the currency naira.

CBN Governor Olayemi Cardoso stated this at a press briefing on Tuesday at the end of the 297th meeting of the Monetary Policy Committee (MPC) in Abuja.

Cardoso announced the committee’s decision to further raise Monetary Policy Rate (MPR) which measures interest rates by 50 basis points from 26.75% to 27.25% to tighten inflation rate which stands at 32.15%.

President Bola Tinubu appointed Cardoso as CBN chief in September 2023 after the fate of embattled Godwin Emefiele. Cardoso’s appointment was immediately confirmed by the Senate.

The MPC under Cardoso in the last year has raised the interest rate by 8.5%, from 18.75% in September 2023, to 27.25% 12 months later. Under Cardoso, the naira, which exchanged for around ₦700/$1 in September 2020, now sells for over ₦1,600/$1.

Asked whether the monetary policies of the apex bank including multiple interest rate hikes and the collapse of the foreign exchange windows are working considering the economic hardship Nigerians are facing, the CBN boss blamed his predecessor’s policies for the monetary situation of the country.

“We came into a very loose money supply situation between 2017 and 2023 and witnessed pumping of liquidity into the system.

“In 2015, the money supply was about N19tn, and in 2023, it was N54tn. That’s a huge increase, a very huge increase. And then a substantial amount of that was through ways and means. So, essentially, the printing of money resulted in a huge amount of money chasing the same amount of goods or a relative amount of goods. I think that context is very important to have.”

“Don’t forget that here was a situation where the exchange rate was running at an incredible pace and people had begun to lose confidence in the currency.

“So, we believe that these multiple rate hikes have helped people to now begin to take a different look at their currency, and there is a greater incentive to hold the naira as opposed to a situation we had before where this was not the case,” Cardoso said.

“I accept the fact that many outside are finding things very difficult but I want to say that the things we are doing are set to put the economy of this country in a trajectory where we shouldn’t go back and see some of the inefficiencies we’ve seen in our system over the recent past. These, I believe are short-term pains and I believe we will get out of the situation we are in now.

“Tough though they may, and I accept that they may be tough but we have no choice but to deploy these tools to reign in the excess liquidity in the system, the high inflation and encourage portfolio investors who had taken flight to come back and take interest in Nigeria,” he added.