Former CBN Deputy Governor Commends CBN’s Aggressive Rate Hike to 22.5% in Bid to Tackle Inflation

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Kingsley Moghalu, a former Deputy Governor of the Central Bank of Nigeria (CBN), has praised the Monetary Policy Committee (MPC) for its bold decision to hike the Monetary Policy Rate (MPR) by a substantial 400 basis points to 22.5%. Moghalu emphasized the necessity of such a drastic move in combating the prevailing inflationary pressures gripping the Nigerian economy.

Drawing from his experience, Moghalu highlighted the critical importance of aggressive monetary policy measures in curbing inflation over the medium term. He referenced a similar approach taken a decade ago, during his tenure at the CBN, when the institution successfully reduced inflation from 14% to 8% through decisive rate hikes.

According to Moghalu, the current inflationary environment demands nothing less than a robust response to ensure price stability and safeguard the purchasing power of the Nigerian populace. He stressed that the MPC’s action aligns with the imperative of reining in inflation within a timeframe of 12 to 18 months, emphasizing the need for resolute measures to achieve this goal.

The decision to hike the MPR to 22.5% reflects the MPC’s commitment to proactively address the root causes of inflation, including currency depreciation, rising energy costs, fiscal deficits, and heightened insecurity in key food-producing regions. Moghalu expressed confidence that the aggressive rate hike, coupled with complementary policy measures, would serve to anchor inflation expectations and set the stage for a gradual decline in inflation rates.

Furthermore, Moghalu emphasized the importance of maintaining consistency and resolve in implementing monetary policy measures to ensure their effectiveness. He underscored the role of central bank independence and credibility in instilling confidence in financial markets and fostering macroeconomic stability.

In light of the MPC’s decisive action, Moghalu called for concerted efforts from both monetary and fiscal authorities to support the implementation of complementary policies aimed at addressing structural imbalances and promoting sustainable economic growth. He urged policymakers to prioritize fiscal discipline, structural reforms, and investment in critical infrastructure to complement the efforts of the central bank in restoring macroeconomic stability.

Overall, Moghalu’s endorsement of the MPC’s aggressive rate hike underscores the gravity of the inflationary challenge facing Nigeria and the imperative of decisive action to mitigate its adverse effects on the economy. As stakeholders navigate the complex economic landscape, Moghalu’s insights serve as a reminder of the importance of proactive and coordinated policy responses in addressing pressing macroeconomic challenges.

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