ABUJA: Nigeria’s central bank has pledged to restore price stability and steady the country’s battered currency, signalling tighter monetary policy ahead.

“The Central Bank of Nigeria (CBN) is committed to achieving monetary and price stability,” governor Olayemi Cardoso said in a sweeping speech to bankers last Friday.

“We will tackle institutional deficiencies, restore corporate governance, strengthen regulations and implement prudent policies.”In his first speech since taking office in September, Cardoso said the central bank will direct banks to bolster capital levels.

He also spelled out that policymakers would embrace orthodox central banking practice.“As part of this new focus, the CBN has just approved the adoption of an explicit inflation-targeting framework to enhance the effectiveness of monetary policy,” he said, adding that the bank was working out the details.

“The CBN will provide forward guidance, enhance transparency and maintain effective communication with the public to anchor expectations.”

The speech, delivered at the end of an annual banking industry dinner, had been highly anticipated for evidence he had a plan to tackle surging price pressures and currency weakness. The naira has slumped by around 40% against the dollar since June.The central bank raised its key rate by 25 basis points to 18.75% when it last met in July. Inflation since then has accelerated to an 18-year high of 27.3%.

Cardoso said inflation would be effectively managed by tightening monetary conditions during the next two quarters.

His stance signals a willingness to defend the autonomy of the central bank. President Bola Tinubu has previously called for lower lending rates to kick-start growth.

But he provided no hints that policymakers were planning to meet soon after a gathering scheduled for earlier this week was cancelled at short notice.

He did note that the law required the monetary policy committee to meet four times a year and this threshold had already been achieved for 2023. — Bloomberg