The Central Bank of Nigeria (CBN) has stated that without its policy interventions, inflation could have risen to 42.81% in December 2024.
CBN Governor, Yemi Cardoso, disclosed this on Thursday at the 2025 Monetary Policy Forum in Abuja, attended by government officials, private sector leaders, and economic experts.
He also projected that diaspora remittances would increase to N31.787 trillion once fourth-quarter 2024 figures are released.
Cardoso noted that to curb inflation, the CBN implemented significant monetary policies in 2024, including:
- Raising the Monetary Policy Rate (MPR) by 875 basis points to 27.50%.
- Increasing the Cash Reserve Ratio (CRR) for banks to 50%.
- Adjusting the asymmetric corridor around the MPR.
Additionally, the CBN introduced financial system reforms to stabilise the economy. A unified exchange rate window was launched to enhance FX market efficiency, leading to a 79.4% increase in remittances through International Money Transfer Operators (IMTOs), reaching $4.18 billion in the first three quarters of 2024 compared to $2.33 billion in 2023.
The CBN also cleared a $7 billion backlog of FX commitments, restoring market confidence and boosting liquidity.
Key Economic Reforms
Cardoso outlined other reforms aimed at strengthening Nigeria’s financial system:
- Lifting restrictions on 41 items previously banned from the official FX market since 2015.
- Introducing new minimum capital requirements for banks, effective March 2026, to boost sector resilience.
- Launching the WIFI initiative under the National Financial Inclusion Strategy to improve women’s access to financial services.
- Introducing the Nigeria Foreign Exchange Code, enhancing transparency and efficiency in the FX market.
He emphasised the need for sustained policy coordination between fiscal and monetary authorities to ensure price stability, restore purchasing power, and ease economic hardship.
“As we move forward into 2025, I am optimistic that we have turned a corner and that disinflation is within reach,” Cardoso said. “However, we must remain committed to bold, coordinated policy measures to sustain progress.”
CBN Deputy Governor for Economic Policy, Mohammed Abdullahi, highlighted the impact of FX market liberalisation, which helped unify the exchange rate and reduce speculative premiums.
Before adopting a flexible exchange rate regime, the exchange rate premium averaged 62.33% between January and May 2023. By June 2023, the premium had dropped to 0.10%, signalling progress towards market stability.
Credit: NAN (Text Excluding Headline)
