CBN Unleashes Bold New Policies To Crush Inflation And Boost The Economy

CBN Unleashes Bold New Policies To Crush Inflation And Boost The Economy

The Central Bank of Nigeria (CBN) has introduced a new inflation-targeting framework as part of its strategy to combat rising inflation, marking a significant shift from its previous exchange rate-focused policies.

This framework, already in use by several African central banks, aims to enhance Nigerians’ purchasing power, increase disposable income, drive aggregate demand, and stimulate production. The effects of inflation are being felt nationwide, making price stability a core priority for the CBN.…….READ MORE 

As part of its efforts, the CBN recently hosted the Monetary Policy Forum 2025 in Abuja, bringing together fiscal authorities, legislators, private sector stakeholders, development partners, and economic experts under the theme “Managing the Disinflation Process.”

During the forum, CBN Governor Olayemi Cardoso emphasized the bank’s focus on maintaining price stability and transitioning to an inflation-targeting framework. He highlighted strategies aimed at restoring purchasing power and easing economic hardships, while reaffirming the CBN’s disciplined monetary approach to stabilizing the economy.

“These actions have produced measurable progress,” Cardoso stated. “We’ve seen relative stability in the FX market, a narrowing of exchange rate disparities, and an increase in external reserves, which reached over $40 billion by December 2024.”

Cardoso stressed the importance of collaboration between fiscal and monetary authorities to effectively manage disinflation amidst persistent economic shocks.

Additionally, the CBN is strengthening the banking sector with new minimum capital requirements for banks, effective March 2026, to ensure resilience and position Nigeria’s financial system for a projected $1 trillion economy. The launch of the Nigeria Foreign Exchange Code also aims to promote transparency, fairness, and integrity within the FX market.

Financial inclusion remains a top priority, with initiatives like the Women Entrepreneurs Finance (We-FI) program under the National Financial Inclusion Strategy, which seeks to bridge the gender gap by increasing women’s access to financial services and digital tools.

CBN’s reforms have already shown positive results. Remittances via International Money Transfer Operators (IMTOs) rose by 79.4% to $4.18 billion in the first three quarters of 2024, following key FX market reforms. The CBN also lifted the 2015 restrictions on 41 items, enhancing trade and investment opportunities.

Despite a recent rise in inflation, the economy remains attractive to investors. Bala Bello, a member of the CBN-led Monetary Policy Committee (MPC), highlighted the growth in Nigeria’s external reserves to $40.88 billion as of November 2024, bolstering the country’s economic resilience and attractiveness to both domestic and foreign investors.

Globally, inflation is expected to decline to 3.5% in 2025, down from its peak of 9.4% in 2022. Despite subdued global growth at 2.6%, Nigeria’s Real Gross Domestic Product (GDP) has maintained a positive trajectory, growing by 3.46% in Q3 2024, driven by both the oil and non-oil sectors.

CBN’s ongoing efforts, coupled with global economic adjustments, position Nigeria for sustained growth and macroeconomic stability. However, continued vigilance and collaboration between monetary and fiscal authorities remain key to navigating the challenges ahead.