21%: CBN’s inflation target for 2024 not visible – Expert


A financial expert has said that inflation targeting of 21 per cent set by the Central Bank of Nigeria(CBN) for 2024 financial year is not Visible, as a lot of factors is affecting inflation in the country.

The Head, Financial Institutions Ratings, at Agusto & Co.Mr Ayokunle Olubunmi who disclosed this at a forum in Lagos  said the CBN governor’s projection  can only be realized if all the countervailing variables have been addressed. 

To this effect, he said an average inflation rate for 2024  in best situation would be at 26.1 percent while the worst case scenario it would be at 28.2 percent. 

He also said that the CBN needs to over supply dollar in the foreign exchange market untill the exchange rate stabilize, adding that it will be difficult for foreign investors to invest in an economy with unstable exchange rate.

The CBN governor had earlier said that 

the CBN’s adoption of an inflation-targeting framework involves enhanced communication and collaboration with fiscal authorities, aiming for price stability, potentially leading to lowered policy rates, increased investment, and job creation.

Looking ahead, Cardoso announced that the upcoming MPC meeting in late February will review the situation and make further decisions on crucial economic issues.

He assured the distinguished Senators that inflationary pressures are anticipated to decrease in 2024, driven by the CBN’s inflation-targeting policy, improved agricultural productivity, and alleviated global supply chain pressures.

Speaking on a theme 2024 economic Review/ Outlook: impacts of Reform on Banks” he predicted that the nation’s official  exchange at best scenario is likely to remain at N1400 to dollar while parallel market would be N1450 but on a worse scenario the exchange would be traded at N1800 per dollar

He said Nigeria’s foreign exchange earnings this year will depend majorly on oil revenue and that the price of crude oil which averaged $80pbl in 2023 will likely settle around $70 to $75pbl in 2024 and that Nigeria’s crude oil production can not exceed 1.5 barrels per day in 2024.

He, however, said that apart  from insecurity, the increase in exchange rate is also going to affect inflation because Nigeria is an import dependent country, rising cost of importation will have effect on the inflationary situation which will invariably affect growth. 

Meanwhile, Nigeria’s inflation has been on the rise for 11 consecutive months, reaching a new high in December 2023, according to the National Bureau of Statistics (NBS). The annual inflation rate rose to 28.92 per cent in December from 28.20 per cent in November.

He listed exchange rate, interest rate and inflation as major economic variables that are likely to  impact on Nigeria’s growth in Gross Domestic Product (GDP) in 2024.

He explained how the level of interest rate, inflation rate and  foreign exchange will drive Nigeria’s GDP growth to 2.6 percent in severe case scenario, 3 percent as a base case scenario, but at best, will not exceed 5 percent this year. 

Specifically, Olubunmi said  that interest rate is a very good tool that  the monetary policy authorities use to monitor and fight inflation and even exchange rates. 

According to him, everything in Nigeria today is pointing towards higher interest rates because one of the reason why there is a lot of pressure on the naira is that there is a low interest rate environment, stressing that high rates moderate economic activities. 

That is why there are high expectations that the Monetary Policy Committee of the CBN will increase interest rate by about 500 basis point at the forthcoming MPC meeting this month he said. 

UNI Agric Markurdi
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