The Governor of the Central Bank of Nigeria, Mr. Olayemi Cardoso, announced that the bank has once again increased the interest rate during its recent Monetary Policy Committee (MPC) meeting to combat inflation.
He explained that the decision to introduce the Electronic Foreign Exchange Matching System (EFEMS) stems from the belief that trust is crucial for central banking. Speaking to members of the Harvard Club of Nigeria in Lagos over the weekend on the topic, “Leadership in Challenging Times: Restoring Credibility, Building Trust, and Containing Inflation,” Cardoso stated, “Raising the Monetary Policy Rate (MPR) to 27.25% was a significant decision. Although higher interest rates can be burdensome for borrowers, they are essential for reducing excess money circulation and controlling inflation. Leadership involves making tough decisions to ensure long-term stability rather than seeking short-term comfort.”
Emphasizing important leadership lessons, the CBN governor remarked, “Navigating difficult times requires resisting the urge to pursue too many initiatives. The Central Bank must concentrate on its primary goal—price stability. It’s easy to get sidetracked by various political and economic pressures, but a leader must maintain focus. Effective communication is just as vital as implementing the right policies. Transparent and open communication builds trust. From sharing the results of the Dutch Auction to providing regular economic data updates, transparency has guided our actions. Trust is established when the public believes that a central bank will take necessary measures to ensure economic stability, even if those measures are uncomfortable or politically sensitive.”
He reiterated that the CBN’s actions aim to improve transparency and provide more accurate oversight of foreign exchange transactions, highlighting that the effectiveness of central banking relies on public trust.
