CBN Expresses Optimism Over FG’s Food Inflation Strategy

The Central Bank of Nigeria (CBN) has expressed optimism about the Federal Government’s recent measures to address the food supply deficit, which is expected to help curb inflation.

The Governor of the CBN, Olayemi Cardoso, who doubles as the Chairman of the MPC disclosed this at the end of the 296th MPC meeting on Tuesday in Abuja.

Cardoso said the government’s initiatives, including the 150-day duty-free import window for food commodities, will moderate domestic food prices and help bridge the food supply gap.

The CBN governor noted that the measures will not lead to a direct injection of liquidity into the economy, which could exacerbate inflation. Instead, they will help stabilize food prices and reduce the pressure on the currency.

The CBN’s optimism comes as the country’s inflation rate continues to rise, driven largely by food inflation.

He attributed the increase to the prevailing insecurity in food-producing areas, high transportation costs, and the activities of middlemen who hoard and move farm produce across the border to neighboring countries.

He commended the government’s efforts to improve domestic food production and encouraged the Bank to engage with Development Finance institutions to support industries, particularly Small and Medium Scale Enterprises (SMEs).

The apex bank governor also emphasized the need for a defined exit strategy to ensure that the recent gains in domestic food production are sustained.

His words: “While the measure is a welcome development and may prove effective in the short run, it is expedient that it is implemented with a defined exit strategy to avert a possible rollback of the recent gains in domestic food production.

“To support these initiatives, the Bank is already engaging Development Finance institutions like the Bank of Industry (BOI) to ensure adequate support to industries with a focus on Small and Medium Scale Enterprises (SMEs).”

He assured that the MPC has resolved to sustain its collaboration with the fiscal authority to ensure that inflationary pressure is subdued.