The Central Bank of Nigeria (CBN) asserted its critical role in curbing inflation, projecting that without its interventions, the inflation rate could have soared to a staggering 42.81% by the end of 2024. This claim was made by CBN Governor, Olayemi Cardoso, at the 2025 Monetary Policy Forum in Abuja, a gathering of key stakeholders including government ministers, heads of economic agencies, and private sector leaders. Cardoso emphasized the CBN’s commitment to orthodox monetary policies to maintain price stability and foster economic growth in 2025 and beyond. The governor outlined the various policy measures implemented throughout 2024, including significant increases in the Monetary Policy Rate (MPR) and the Cash Reserve Ratio (CRR), aimed at tightening monetary conditions and curbing inflationary pressures.
Cardoso underscored the importance of the CBN’s foreign exchange (FX) reforms, highlighting the unification of multiple exchange rate windows as a key driver in boosting diaspora remittances. The unification, he explained, led to a substantial increase in remittances through International Money Transfer Operators (IMTOs), demonstrating the positive impact of a more transparent and efficient FX market. Furthermore, the CBN successfully cleared a significant FX backlog, restoring market confidence and improving liquidity. The removal of restrictions on 41 items previously barred from accessing the official FX market, coupled with the introduction of new minimum capital requirements for banks slated for 2026, further demonstrated the CBN’s proactive approach to strengthening the financial sector and promoting international competitiveness.
Beyond FX reforms, the CBN launched the WIFI initiative under its National Financial Inclusion Strategy. This initiative focuses on empowering women through financial services, education, and digital tools, aiming to bridge the gender gap in financial access. The introduction of the Nigeria Foreign Exchange Code further solidified the CBN’s commitment to transparency, integrity, and efficiency in the FX market, fostering trust and confidence within the financial sector. These collective efforts, according to Cardoso, exemplified the CBN’s dedication to creating an environment conducive to inclusive economic development, emphasizing the crucial role of sustained vigilance and proactive monetary policy in achieving and maintaining macroeconomic stability.
Looking ahead, Cardoso cautioned that managing disinflation amidst persistent supply and demand shocks requires robust policy coordination between fiscal and monetary authorities. He stressed the ongoing focus on price stability, the planned transition to an inflation-targeting framework, and strategies to restore purchasing power and alleviate economic hardship. While optimistic about Nigeria’s economic trajectory and the attainability of disinflation, Cardoso emphasized the need for bold and coordinated policy actions to solidify progress. He also highlighted the potential for improved global capital flows to emerging markets as advanced economies ease their monetary policies, noting that Nigeria’s ability to attract these inflows hinges on investor confidence in domestic reforms, macroeconomic stability, and positive real returns on investment.
Supporting Cardoso’s statements, CBN Deputy Governor, Economic Policy, Mohammed Sani Abdullahi, provided further insights into the impact of the FX market liberalization. Abdullahi detailed the significant reduction in the FX premium following the adoption of a flexible exchange rate regime, highlighting the success of this measure in promoting market convergence and reducing speculative pressures. He also presented promising figures on diaspora remittances, which experienced substantial growth and were projected to reach even higher levels by the end of 2024. This growth, attributed in part to the FX reforms, underscored the positive impact of a more unified and efficient FX market on inward remittances.
Despite the positive developments, Abdullahi acknowledged the challenges posed by persistent supply and demand shocks, which hindered efforts to achieve the single-digit inflation target. These shocks, he explained, necessitated decisive policy interventions to prevent the entrenchment of inflationary expectations. He stressed the importance of ongoing communication and engagement with stakeholders, as exemplified by the Monetary Policy Forum, to ensure transparency and build consensus on the path towards sustainable economic growth and price stability. The forum served as a platform for dialogue and collaboration, reinforcing the CBN’s commitment to working alongside key stakeholders to navigate the complex economic landscape and achieve its policy objectives.
