Cardoso: Naira is undervalued | Inflation expected to decline to 21% in 2024

Olayemi Cardoso, governor of the Central Bank of Nigeria (CBN), says the naira is currently undervalued.

Cardoso spoke at the 2024 macroeconomic outlook launch hosted by the Nigerian Economic Summit Group (NESG).

The CBN governor said combined with coordinated measures on the fiscal side, the apex bank will accelerate genuine price discovery in the near term.

He said CBN has reverted to the conventional monetary policy approach with a focus on achieving price stability, which fosters sustainable economic growth.  

“We believe that the naira is currently undervalued,” Cardoso said.

Cardoso also said the apex bank aims to rein in inflation to 21.4 percent in 2024.

In 2023, the inflation continued on an upward trend, rising to 28.92 percent in December — the 12th consecutive rise in the country’s inflation rate.

However, Cardoso said inflationary pressures are expected to reduce in 2024.

“Inflationary pressures are expected to decline in 2024 due to the CBN’s inflation-targeting policy, which aims to rein in inflation to 21.4%,” he said.

Cardoso said the target will be aided by improved agricultural productivity and the easing of global supply chain pressures, which he said would benefit businesses by boosting consumer confidence and purchasing power.

“The CBN adoption of the inflation-targeting framework involves clear communication, use of monetary policy instruments, and collaboration with fiscal authorities to achieve price stability, fostering market confidence and positively influencing consumer behaviour,” he said. 

“The outlook for decreasing inflation in 2024 will have a profound impact on businesses, providing a more predictable cost environment and potentially leading to lower policy rates.”

Cardoso said it will stimulate investment, fuel growth and create job opportunities.