July 08, (THEWILL) – The Central Bank of Nigeria (CBN) has said the country would witness stability in interest rates once the apex bank can control and reverse galloping inflation.
Galloping inflation refers to a rapid and accelerating increase in the general price level of goods and services in an economy. It is characterised by high and continuously rising inflation rates, often reaching hyperinflationary levels with severe economic consequences, including a loss of purchasing power, erosion of savings, and economic instability.
Speaking at the unveiling of a book titled: ‘The Power of One Man: How the Soludo-Engineered Consolidation Transformed Nigerian Banks to Global Players’, held in Lagos at the weekend, CBN Governor, Olayemi Cardoso, said the apex bank is committed to its core mandate of price stability, maintaining a stable exchange rate and economic growth.
Represented at the event by Phillip Ikeazor, CBN Deputy Governor, Financial Systems Stability, Cardoso noted that the bank would exercise caution and operate in sequence in its efforts to maintain interest rate stability to avoid plunging the economy into hyperinflation.
Recall that the Cardoso-led Monetary Policy Committee had recently increased the interest rate from 24.75 per cent to 26.25 per cent.
“We are aware that in the Western world, they did have rate hikes to be able to control theirs and they maintained it for a very long time. It is only now that they stop the rate hike and they have not even started dropping the rate as we speak,” Cardoso said.
He applauded the courage of the Governor of Anambra State, Prof. Charles Soludo, for initiating and implementing the 2004/2005 banking consolidation that strengthened the nation’s banking industry and bolstered banks’ ability to finance the private sector and long-term projects in Nigeria.
According to him, Nigerian bank’s GDP currently weighs behind when compared with peers in other African countries, an indication that there is an urgent need for the banking sector’s capitalisation. He said the exercise would strengthen the banks and make them more robust to meet expected headwinds.
