The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has stressed that Nigeria’s quest for macroeconomic stability hinges on credible monetary policy and strong coordination among key economic actors.
Speaking in Abuja on Thursday at the CBN’s Monetary Policy Forum, Cardoso said sustainable stability cannot be achieved in isolation, but through alignment between monetary authorities, fiscal institutions, the private sector, and the broader public.
The forum, themed “Strengthening Nigeria’s Macroeconomic Stability Through Effective Monetary Policy: The Role of Critical Stakeholders,” brought together policymakers and industry players to deepen engagement on reform outcomes.
Cardoso described the theme as both timely and consequential, noting that Nigeria’s economic recovery is unfolding against a backdrop of persistent global and domestic pressures.
“Macroeconomic stability is a shared responsibility,” he said. “Monetary and fiscal authorities, financial institutions, the private sector, and the wider public are all indispensable in shaping policy outcomes.”
Inherited imbalances, credibility crisis
The CBN governor offered a candid assessment of the conditions he met upon assuming office in 2023, describing an economy weighed down by distortions and policy inconsistencies.
According to him, inflation surged to 29.9 per cent in January 2024, driven by food price shocks, exchange rate pass-through, and deep-rooted supply constraints.
He also highlighted the scale of fiscal and monetary dislocations, including:
Ways and Means financing rose to N26.95 trillion by May 2023, far above legal limits
A backlog of over $7 billion in unmet foreign exchange obligations
A widening parallel market premium exceeding 60 per cent
Severely depleted net foreign reserves, which fell to $3.99 billion at end-2023
Cardoso said these conditions eroded investor confidence, weakened policy transmission, and undermined the credibility of the apex bank.
Reforms to restore discipline and confidence
He explained that the bank responded with a series of “bold but necessary” reforms aimed at restoring orthodoxy, rebuilding trust, and stabilising the macroeconomic environment.
A key intervention was the sharp reduction in Ways and Means financing, which dropped from N26.95 trillion in 2023 to N3.51 trillion by December 2024, and further to N2.84 trillion by January 2026.
“This marked one of the most decisive fiscal consolidations in recent history,” Cardoso said, adding that it helped restore compliance with statutory limits and reinforced central bank independence.
On monetary tightening, the CBN pursued an aggressive stance through 2024, raising the Monetary Policy Rate (MPR) by 875 basis points—from 18.75 per cent to 27.50 per cent—to rein in inflationary pressures.
With early signs of disinflation, the bank initiated a cautious easing cycle:
Rate cut to 27.0 per cent in September 2025
Further reduction to 26.5 per cent in February 2026
Cardoso noted that while the reforms were difficult, they were necessary to secure long-term economic stability.
‘Worst phase of adjustment behind us’
The CBN governor expressed optimism that the most difficult phase of Nigeria’s macroeconomic adjustment has passed, with a more stable foundation now in place.
“We have laid the groundwork for sustained stability,” he said, reaffirming the bank’s commitment to transparency, policy discipline, and continuous stakeholder engagement.
Fiscal authorities back reforms
Also speaking, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, said ongoing reforms are helping to cushion the economy against global shocks.
He noted that the Economic Management Team is actively monitoring external risks while working to sustain disinflation and economic resilience.
“The Nigerian economy has continued to demonstrate resilience,” Edun said, adding that the ministry would deepen collaboration with the CBN to consolidate gains.
Similarly, the Minister of Budget and Economic Planning, Atiku Bagudu, commended the CBN’s stakeholder engagement strategy, describing it as both timely and impactful.
He said feedback from stakeholders remains critical to refining monetary policy decisions and improving outcomes.
Dialogue, credibility central to policy effectiveness
In his remarks, the CBN Deputy Governor for Economic Policy, Muhammad Abdullahi, described the forum as an essential platform for policy dialogue.
He emphasised that in modern monetary systems, credibility, communication, and expectation management are increasingly central to policy success.
“Regular engagement ensures policy direction is well understood and aligned with real-sector expectations,” he said.
