Nigeria’s central bank to tighten policy to curb inflation

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Nigeria’s central bank will tighten its policy over the next two quarters to manage inflation, while directing banks to boost capital to support an expansion of the economy, its new governor, Olayemi Cardoso, said yesterday.

Cardoso, who took over the reins in September, faces immediate pressure to curb excess liquidity in the banking system and tackle inflation, which has risen for 10 consecutive months, reaching 27.33% in October, the highest in about 18 years.

Outlining his policy thrust, Cardoso told bankers that Nigeria could grow in size to $1 trillion over the next seven years and that lenders required extra capital to play in a bigger economy.

Nigeria’s $240 billion economy recorded third-quarter growth of 2.5% on Friday, barely changed from the previous quarter, as its loss-making dominant oil sector contracted at a much slower pace while government reforms were yet to take effect.

Africa’s largest economy could grow by 3.9% in the fourth quarter, Cardoso said.

Cardoso pledged to focus on rebuilding trust at the regulator, managing liquidity to curb inflation, bringing down high interest rates and stabilise the exchange rate.

“The Central Bank of Nigeria (CBN) is fully committed to ensuring price stability and financial system stability,” Cardoso told bankers in the commercial hub of Lagos.