A member of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria, Professor Murtala Sabo Sagagi, has warned that excessive fiscal spending, particularly during politically sensitive periods, could reverse Nigeria’s recent gains in the fight against inflation.
Sagagi made the warning in his personal statement following the 304th MPC meeting held in February, where policymakers assessed inflation trends, monetary policy measures and broader macroeconomic conditions.
He said sustaining the country’s disinflation process would require stronger coordination between fiscal and monetary authorities, warning that unchecked government spending could weaken the impact of the central bank’s tightening measures.
“Close coordination between monetary and fiscal policy is essential. Increased fiscal releases associated with electoral cycles could reverse disinflation gains. The CBN should maintain dialogue with the fiscal authorities to ensure more responsible spending,” he said.
The MPC member also urged the apex bank to closely monitor the transmission of lower policy rates to commercial lending rates, noting that persistently high borrowing costs remain a burden on businesses.
“The CBN should monitor the pass-through of rate reductions to lending rates closely. The persistence of elevated bank lending rates despite monetary easing would suggest structural impediments in the transmission mechanism that require targeted macroprudential action,” Sagagi stated.
He further identified insecurity and structural bottlenecks in the agricultural sector as major threats to price stability and economic recovery.
According to him, insecurity in farming communities continues to disrupt food production and agricultural productivity, while farmers are still battling rising costs of inputs such as fertilisers, seedlings and pesticides despite easing commodity prices.
Sagagi also called for stronger financial oversight of security agencies to ensure resources allocated to tackling insecurity are effectively utilised.
The CBN has maintained an aggressive monetary tightening stance over the past year in an effort to tame inflation and stabilise the economy following fuel subsidy reforms, exchange rate volatility and rising food prices.
Although Sagagi acknowledged signs that inflationary pressures may be moderating, he warned that the gains remain fragile due to persistent structural weaknesses in the economy.
At its 304th MPC meeting in February, the committee reduced the Monetary Policy Rate (MPR) by 50 basis points to 26.5 per cent from 27 per cent, citing improvements in key macroeconomic indicators, especially inflation.
The MPC retained the Cash Reserve Ratio at 45 per cent for commercial banks and 16 per cent for merchant banks, while the Liquidity Ratio remained at 30 per cent. The Standing Facilities Corridor was also maintained at +50/-450 basis points around the MPR.
Meanwhile, data released by the National Bureau of Statistics showed that Nigeria’s headline inflation rate rose slightly to 15.38 per cent in March 2026 from 15.06 per cent in February.
Sagagi’s remarks underscore growing concerns within the MPC that monetary policy alone may not be sufficient to stabilise prices without fiscal discipline and broader structural reforms.
