The Central Bank of Nigeria (CBN) has stated that without its policy interventions, inflation could have surged to 42.81 per cent by December 2024.
The CBN Governor, Olayemi Cardoso, made these disclosures in Abuja on Thursday at the 2025 Monetary Policy Forum, which brought together ministers, heads of economic agencies, and private sector players.
He stated that counterfactual estimates suggest that without decisive policy interventions, inflation could have reached 42.81 per cent by December 2024.
He further noted that throughout 2024, the CBN implemented bold policy measures across six Monetary Policy Committee meetings, including raising the Monetary Policy Rate by 875 basis points to 27.50 per cent, increasing the Cash Reserve Ratio for Other Depository Corporations by 1,750 basis points to 50.00 per cent, and adjusting the asymmetric corridor around the MPR.
Cardoso also disclosed that the unification of multiple exchange rate windows contributed to a 79.4 per cent rise in remittances via International Money Transfer Operators to $4.18bn in the first three quarters of 2024, up from $2.33bn in the same period in 2023.
He projected that diaspora remittances would rise to N31.79tn when fourth-quarter figures for 2024 are released.
He also pledged to stick to orthodox monetary policies to tame inflation in 2025.
The apex bank governor listed other major FX-related interventions including clearing a $7bn FX backlog, which restored market confidence and improved FX liquidity, lifting restrictions on 41 items previously banned from access to the official FX market since 2015, and introducing new minimum capital requirements for banks, effective March 2026, to enhance resilience and global competitiveness in the sector.
On inflation, the CBN governor warned that managing disinflation amid persistent shocks would require strong policy coordination between fiscal and monetary authorities.
He reaffirmed the apex bank’s commitment to maintaining monetary stability through stringent policy measures and proactive oversight.
Cardoso said, “Achieving monetary policy stability requires sustained vigilance and a proactive monetary policy stance. And I can assure you we will tighten our vigilance on the market.”
According to him, 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.
Impact of excess liquidity and monetary policy response
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.
He said excess naira liquidity in the system has amplified demand-driven inflation, which has been worsened by supply-side constraints. This, he stressed, demonstrates the need for discipline and a coordinated approach to monetary policy to restore stability.
Outlook for 2025
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.
To further strengthen the financial sector, the CBN recently introduced a new minimum capital requirement for banks, set to take effect in March 2026.
According to Cardoso, this policy aims to enhance the resilience and global competitiveness of Nigeria’s banking sector, positioning it to support the government’s ambition of a $1 trillion economy.
“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 it will maintain a watchful eye on market trends and take necessary steps to ensure stability in the financial sector.