The governor of the Central Bank of Nigeria, Godwin Emefiele, has predicted that with the help of the CBN’s numerous monetary policy instruments, inflation rates will progressively decline to less than 15% by the end of 2023.
According to data from the National Bureau of Statistics, inflation in Nigeria reached a record high of 5.09 percent to 21.09 percent from October 2022 to the same month in 2021.
But Emefiele added that the 2023 elections would first cause a modest spike in inflation, followed by a sustained decline, while addressing at the 57th annual Banker’s Dinner held by the Chattered Institute of Bankers of Nigeria in Lagos yesterday.
He said: “Inflation expectations are rising as existing structural rigidities are compounded by global factors and anticipated election-related liquidity upsurge. For the rest of 2022 and towards mid-2023, Nigeria’s rate of inflation is projected to remain elevated and above the 12.5 percent growth-aiding threshold.
“However, on the backdrop of our previous policy measures, and as the effect continues to permeate the system, our inhouse model-based simulations indicate that inflation rate could fall steadily to less than 15 percent by end-2023.”
He continued by saying that as the economy struggles, inflationary pressure is predicted to worsen and persist in many economies.
He added: “The rate in key advanced economies is projected to remain historically elevated at double digit levels up to the 2023 third quarter at the earliest. As such, tight monetary conditions will remain prevalent over the short-term, straining financial markets in many EMDEs and exacerbating the underlying vulnerabilities.
“Considering the current developments in both the global and domestic economies, and based on extensive simulations, the CBN is of the view that the short-term outlook of the Nigerian economy remains good.”
In addition, he stated in his 2023 projection that the goals of price, monetary, and exchange rate stability would continue to be the primary focus of monetary policy in the ensuing years.
“Our policy stance will, accordingly, remain tight to curtail inflation pressure, regulate capital flows, and buoy the naira-dollar exchange rate. Monetary policy decisions will remain balanced, judicious, research-driven, adequate and supportive of the real economy subject to underlying fundamentals.
“We will maintain the current tight Monetary Policy stance in the near-term, especially in view of rising inflation expectations and exchange market pressures. Though, we will act to appropriately adjust the policy rate in line with unfolding conditions and outlooks.”
On Nigeria’s GDP, he expressed that based on the expectation of a robust non-oil performance, and barring any unforeseen shocks, GDP growth rate is projected to remain positive in the remaining quarter of 2022 and during 2023.
He said: “The performance of the non-oil sector will be buoyed by the continued efforts at entrenching indigenous productivity in high-impact real sector activities, especially agriculture, MSMEs, and manufacturing. Domestic aggregate demand is further expected to be bolstered by the anticipated budgetary outlay and the surge of electioneering spending in the next few months. From 3.54 per cent in quarter two of 2022, growth is projected to reach 3.7 percent in quarter three and 3.47 per cent by the fourth quarter.”
The President and Chairman of Council of the Chartered Institute of Bankers of Nigeria Ken Opara said: “I would to use this medium to acknowledge and appreciate Godwin Emefiele for his contribution to the identity and economy as a whole especially in maintaining a sound financial system and economic growth
“The CBN has over the years continued to contain economic shocks from the aftermath of the COVID-19 pandemic to stimulate the economy, fight inflation and other related economic issues, most especially the global currency from distortion exacerbated by the declining production fueled by the high cost of production, insecurity, foreign exchange volatility and uncertainties in the global oil market.”