The failed N10 trillion intervention funds and the N27 trillion ways and means (W&M) are partly responsible for the high inflation rate Nigeria is battling with, Governor of the Central Bank of Nigeria (CBN), Yemi Cardoso, has said.

Cardoso stated this yesterday in Lagos at the BusinessDay CEO Forum.

With reining in inflation as the focus, Cardoso said the professionalism and independence-mindedness of the Monetary Policy Committee (MPC) members are helping with the appropriate tools to tame inflation.

“Interest rate is not set by the governor of the Central Bank. The interest rate is set by the members of the MPC. Thankfully, we have a monetary policy committee composed of independent-minded people, who are solely driven by data. The MPC has made it very clear the major issue is taming inflation and has also made it very clear that they will do whatever is necessary to tame inflation,” he said, referring to the ongoing interest rate hike.

While he did not expressly say that the rate may moderate as MPC meets later this month, Cardoso said decisions on rates would be decided by data.

“The MPC is not oblivious to the fact that ultimately we do want growth. If these hikes were not done at the time they were done, the naira-dollar exchange was almost tipping over. This helps to stabilise it.

“Secondly, it is a timing issue. It is not something that will remain with us forever. Fiscal issues are being moderated and the ability to suck up all the excess liquidity in the system and be able to balance things out over some time.

“That is the important thing for the MPC as far as I can see. Between February and May of this year, the month-on-month rate of inflation has gone down 50 per cent. I sense that this is not something that is a one-size-fits-all. I think, in a not too distant future, the interest rate will come down.”

He added that the unbridled liquidity in the system has complicated inflationary pressure.

“Sadly, we have a situation where a lot of money supply went into the system. We all saw ways and means soared to N27 trillion. We saw interventions of N10.5 trillion. It has its consequences. In large respect, that is what we are paying for now,” he explained.

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