Apex bank signals confidence in reforms as inflation drops sharply and policymakers push for long-term price stability….
The Central Bank of Nigeria has reaffirmed its commitment to driving inflation down to single digits, unveiling a major shift in its monetary policy strategy aimed at stabilising prices and strengthening economic confidence.
The move, announced in a statement following a high-level engagement with the Nigerian Economic Society and members of the academic community in Abuja, marks a transition toward a full-fledged inflation-targeting framework widely regarded as a more transparent and disciplined approach to managing the economy.
A major policy reset
Speaking at the March 18 session, the CBN’s Deputy Governor for Economic Policy, Muhammad Abdullahi, described the shift as a defining moment for Nigeria’s monetary policy direction.
He noted that the new framework is designed to be forward-looking and rules-based, with a strong focus on anchoring inflation expectations and ensuring long-term price stability.
According to him, the approach will help shield the economy from external shocks while improving the credibility of policy decisions.
Why inflation targeting matters
At its core, inflation targeting involves setting a clear numerical goal for inflation and aligning policy tools such as interest rates to achieve it.
The CBN believes this strategy will:
- Reduce uncertainty in the economy
- Lower risk premiums for investors
- Encourage long-term investment and growth
Abdullahi stressed that a stable inflation environment is essential for sustainable economic development, particularly in a country like Nigeria that remains exposed to global shocks such as volatile oil prices and geopolitical tensions.
Early signs of progress
The bank pointed to recent improvements as evidence that its reforms are beginning to yield results.
Headline inflation has dropped significantly from 34.8 percent in late 2024 to about 15.1 percent in early 2026 driven by tighter monetary policy and a more disciplined approach to economic management.
Data from the National Bureau of Statistics also showed a slight easing in February 2026, with inflation settling at 15.06 percent.
Reforms supporting the transition
To support the new framework, the CBN has rolled out a series of structural reforms, including:
- A return to conventional monetary policy tools
- Gradual withdrawal from quasi-fiscal interventions
- Foreign exchange market reforms, including rate unification
- Introduction of electronic FX trading platforms
These measures, the bank says, have improved transparency, enhanced price discovery, and reduced volatility in the currency market.
Banking sector and policy coordination
The apex bank also highlighted progress in strengthening the financial system through bank recapitalisation efforts and tighter regulatory oversight.
In addition, closer coordination with fiscal authorities is expected to reinforce the effectiveness of monetary policy.
Collaboration seen as key to success
Also speaking at the event, the Director of the Monetary Policy Department, Victor Oboh, emphasised the importance of collaboration with academics and policy experts.
He noted that beyond technical design, the success of inflation targeting depends heavily on public trust, clear communication, and well-informed expectations.
Meanwhile, Baba Yusuf Musa praised the CBN’s reform agenda, pledging continued support from the economic community.
The road ahead
Looking forward, the CBN remains optimistic about achieving its medium-term goal of reducing inflation to between 6 and 9 percent—provided external shocks remain manageable.
However, officials acknowledge that success will depend on sustained policy discipline, institutional credibility, and the ability to maintain investor and public confidence.
As Nigeria navigates a complex global economic environment, the shift to inflation targeting could mark a turning point, one that reshapes how monetary policy supports stability, growth, and resilience in the years ahead.
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