CBN Slashes Interest Rates down to 26.5%
…Reports $54bn Foreign Reserves as Economy Stabilizes
By Patience Ikpeme
The Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, announced major updates on the nation’s financial health on Tuesday, revealing that Nigeria’s foreign reserves have hit a 13-year high of $54 billion.
In a move to make life easier for citizens and businesses, the Central Bank also reduced the benchmark interest rate from 27 percent to 26.5 percent.
This is the second time in five months that the bank has cut rates, signaling that the worst of the economic hardship may be passing. The Governor explained that this decision was possible because the plan to bring down the high cost of living is working, and the Naira is becoming more stable.
“The Committee’s decision was based on a balanced evaluation of risks to the outlook, which suggests that the ongoing disinflation path will continue,” Mr. Cardoso said. He noted that while inflation was as high as 34 percent in the past, it has now dropped to just above 15 percent. He mentioned that the bank will continue to work hard to ensure that the prices of food and other goods keep falling.
On the strength of the banks, the Governor shared that 20 banks have already met the new minimum capital requirements set by the government, while another 13 are very close to finishing their own fundraising. Since the recapitalization began, a total of 4.05 trillion Naira has been raised. About 71 percent of this money came from Nigerians at home, while 28 percent came from foreign investors.
Mr. Cardoso said this mix shows that both Nigerians and foreigners have great confidence in the country’s banking system. He also assured people who have money in banks that are currently under special government supervision that their funds are completely safe. “Depositor funds in these institutions remain secure and operations continue under close supervisory and regulatory oversight,” he promised.
The Governor further explained that the massive $54 billion in foreign reserves came from more Nigerians abroad sending money home, better trade, and increased exports of non-oil products. He said the bank has been very transparent in telling Nigeria’s story to the world, which has helped build trust in the economy.
Looking toward the future, the Central Bank is working on a new plan for digital assets and online investments. Mr. Cardoso said the bank is talking to experts locally and internationally to make sure the rules are safe and transparent for everyone.
“We believe that a lot of the measures we have taken, though difficult and tough in many respects, have begun to pay off,” the Governor added. He urged all Nigerians and government agencies to stay disciplined and work together to make sure these economic gains are not lost.
