The Central Bank of Nigeria (CBN) Governor, Olayemi Cardoso has reaffirmed the bank’s commitment to building a credible, independent and transparent Monetary Policy Committee (MPC).
Cardoso said this on Thursday at the ongoing IMF/World Bank Group Annual Meetings in Bangkok, Thailand.
The governor, who spoke on how Central Banks Decide: “Committee Decisions- Making and Communication” in an Era of Uncertainty, stressed that the committee’s decisions were informed by rigorous debates, diverse perspectives and integrity.
Cardoso said ensuring the independence of external members and encouraging open discussions among committee members were critical to strengthening public and investor confidence in the bank’s monetary policy decisions.
The governor said the appointment of recognised, independent-minded external members to the MPC was a deliberate step towards reducing groupthink and improving the quality of policy deliberations.
He noted that external members brought perspectives different from those of internal members, who were more closely involved in the bank’s daily operations and had regular access to its data.
Cardoso said the diversity of views had strengthened discussions within the committee, adding that members were encouraged to question existing assumptions and contribute independent assessments before decisions were reached.
“I just want to emphasise something here once again. You see, for us, we were coming in at a time of crisis, and I am not just saying this as a cliché or anything like that.
“But the actions that we have taken post that time were essential to create the credibility of the Monetary Policy Committee and the central bank.
“So that’s really the background we have come from to ensure that we have another chance at building up a monetary policy committee that has credibility and to ensure that once they take decisions, there are decisions that are credible.”
Addressing concerns about the influence of his position as CBN governor on internal committee members, Cardoso said he did not hold separate meetings with them to reach conclusions ahead of formal MPC meetings.
“I don’t do that. All the data is given out to members in advance to allow them to examine the information, ask questions and conduct their own analysis before deliberations begin.”
He added that the committee had a strong secretariat to respond to members’ inquiries and support their assessment of policy options.
On ensuring that external members had access to resources comparable to those available to internal members, Cardoso said the bank provided support to external members.
According to him, the bank also allows them to engage specialists from outside the institution when necessary.
He said the CBN also organised retreats and other engagements outside the formal MPC meeting cycle, sometimes involving experts from other central banks, to strengthen members’ understanding of monetary policy challenges and international experiences.
Cardoso explained that external members were involved from the early stages of the bank’s transition towards inflation targeting rather than being brought into the process only when decisions were ready to be taken.
He said transparency remained central to rebuilding the credibility of both the MPC and the CBN, adding that external members sometimes questioned why certain information had not been made available to the public.
On monetary policy communication, Cardoso said the bank’s approach was to explain the economic conditions and policy considerations underpinning its decisions, particularly when those decisions surprised financial markets.
He cited improved coordination between fiscal and monetary authorities, an agreement to strengthen cooperation between both sides, and greater clarity in overnight financing rates as measures that had supported the effectiveness of monetary policy.
Cardoso also pointed to Nigeria’s improved external reserves, which he said had reached their highest level in 18 years at the time of the decision under discussion, alongside a sustained decline in inflation and continued economic growth.
He said the CBN’s engagement with the media following MPC meetings helped explain the rationale behind policy decisions and enabled market participants to understand the broader economic context.
Cardoso maintained that credibility was essential for managing market expectations, arguing that confidence was built when investors consistently observed an institution making sound decisions and communicating them clearly.
He said the ultimate objective was to establish a monetary policy committee whose decisions were trusted because they were based on independent judgment, transparency and robust deliberation. (NAN)
