CBN Governor Cardoso urges vigilance to ensure monetary stability in Nigeria

Speaking at the 2025 Monetary Policy Forum on Thursday, themed “Managing Disinflation Process,” organised by the apex bank, Cardoso outlined the challenges and progress made in Nigeria’s monetary policy landscape.

According to the CBN Governor, the past year has been marked by persistent inflationary pressures driven by both global and domestic shocks. Despite these challenges, he highlighted measurable progress in stabilizing the country’s foreign exchange market and increasing foreign reserves.

However, he acknowledged that domestic structural challenges, exchange rate fluctuations, and energy price adjustments continue to exert pressure on prices and economic activities. He noted that while structural factors play a key role in Nigeria’s inflation, monetary dynamics have also contributed to price pressures.

Cardoso pointed out that liquidity injections, especially those linked to unorthodox monetary policies since the COVID-19 pandemic, have contributed to inflationary pressures and foreign exchange volatility.

“The liquidity injections associated with unorthodox monetary policies, particularly since the COVID-19 pandemic, have created a significant overhang. While these measures were intended to cushion economic shocks, they did not translate to commensurate productivity growth. Instead, they fueled inflationary pressures and heightened foreign exchange volatility,” he explained.

“Excess naira liquidity in the system has amplified demand-driven inflation, further exacerbated by supply-side constraints. This dynamic underscores the importance of discipline and a coordinated approach in monetary policy to restore stability,” Cardoso added.

Looking ahead, Cardoso expressed optimism that Nigeria is on the path to economic stability and disinflation. However, he stressed the importance of bold policy measures to consolidate the gains made so far.

“As we move forward into 2025, I am optimistic that we are in the process of turning a corner and that disinflation is within reach. However, we must remain committed to bold policy measures to consolidate our progress,” he stated.

“We have introduced a new minimum capital requirement for banks – effective March 2026 – to strengthen the resilience and global competitiveness of the banking sector, positioning it to support the $1 trillion economy,” he noted.

Reaffirming the apex bank’s commitment to monetary stability, Cardoso assured that the CBN will maintain a watchful eye on market trends and take necessary steps to ensure stability in the financial sector.