One of the key goals of the Central Bank of Nigeria (CBN) is to maintain price stability, and this means keeping inflation low and stable to ensure a healthy economic environment.
The CBN stated in its website that one of its core objectives is to ensure monetary and price stability. When prices are stable, it makes it easier for businesses and individuals to plan and make decisions about investments and consumption. Uncontrolled price increases can disrupt economic activity and erode the purchasing power of citizens.
Olayemi Cardoso, governor of the CBN, reiterated that the goal of the CBN is to ensure that monetary policy remains forward-looking, adaptive, and resilient.
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Central banks across the world are obsessed about inflation and, therefore, devote a significant amount of resources at their disposal to fight inflation. The apex bank has instituted key policies and measures to tame inflation. The apex bank’s planned inflation targeting framework remains a key tool required to tame inflation and maintain price and exchange rate stability.
Analysts insist that the focus on price stability derives from the overwhelming evidence that it is only in the midst of price stability that sustainable growth can be achieved.
Inflation is frequently described as a state where “too much money is chasing too few goods”. When there is inflation, the currency loses purchasing power. The purchasing power of a given amount of naira will be smaller over time when there is inflation in the economy.
Inflation showed serious signs of easing, dropping to 23.18 per cent in February, and is expected to slide further in March and second quarter as key indicators in the economy begin the significantly pick up.
However, in March, Nigeria’s headline inflation rate surged to 24.23 per cent, according to data released by the National Bureau of Statistics (NBS).
This demonstrated the persistent pressure on household incomes, rising food prices, and the broader cost of living across the country.
The NBS report highlights that inflation continues to accelerate, driven largely by increases in the prices of essential food and non-food items. This has further strained the finances of millions of Nigerians grappling with sluggish wage increases and economic uncertainty.
Aside the Gross Domestic Product (GDP) rebasing exercise which had positive feedback, a slight slowdown in food prices is being witnessed and a seven per cent dip in petrol costs was also a welcome development.
For many Nigerians, the numbers tell a good story, and should be a forerunner to exchange rate and price stability.
At the same time, Nigeria’s crude oil production climbed by 1.96 percent in February 2025, exceeding its OPEC+ quota and offering a glimmer of hope for the naira.
An economist, and CEO, Financial Derivatives Company Limited, Bismarck Rewane said a stronger oil sector could mean more stable fuel prices and a boost in government revenue.
He said that consumer spending is showing early signs of recovery in the first quarter of 2025. In February 2025, consumers’ confidence index showed a decrease in pessimism, rising from -23.5 index points in the previous month to -19.
The Economic Intelligence Unit (EIU) projects a 4 percent rebound in retail sales in 2025, with consumer spending expected to recover modestly to $127 billion.
There was also significant input by the monetary authorities in bringing inflation down.
For instance, the CBN-led Monetary Policy Committee (MPC) halted its policy rate tightening cycle at the first meeting of the year, the first pause since May 2022.
The decision was part of sustained policy measures and deployment of monetary policy tools to keep a positive inflation outlook and stabilize the naira across markets.
Charlie Bird, director of Trading at Verto, said a number of factors, including rising crude oil prices portend positive signal for the economy.
He said oil price stability, strong dollar liquidity in Nigerian Foreign Exchange Market (NFEM) alongside a tight spread to parallel market, stable or increasing foreign reserve data and any form of FX appreciation with low volatility portend positive signals for the economy, and will impact positively on inflation data.
Speaking during Cordros Asset Management seminar titled: “The Naira Playbook”, he said positive impact of CBN’s reforms has continued affect the market and economic indicators positively.
Also, inflation targeting framework, which replaces the exchange rate targeting framework, aligns with the apex bank’s determination to bring inflation upsurge under control in line with its price stability mandate.
The CBN has also been controlling the growth of money supply to achieve price stability, but over time, the effectiveness of that strategy in achieving price stability in Nigeria had been called into question.
The Comercio Partners, in its 2025 macroeconomic outlook, highlighted that the rebasing of Nigeria’s Consumer Price Index (CPI) to 2024 would also create statistical effects that could lower inflation figures.
In its efforts to tame inflation, the CBN recently hosted the Monetary Policy Forum 2025, featuring fiscal authorities, legislative, private sector, development partners, subject-matter experts, and scholars with the theme: “Managing the Disinflation Process”.
The forum is a major push to improve monetary policy communication, foster dialogue, and collaborate on critical issues shaping monetary policy.
During the event, CBN Governor, Olayemi Cardoso explained that the apex bank’s focus is to sustain price stability, the planned transition to an inflation-targeting framework, and strategies to restore purchasing power and ease economic hardship.
He said the apex bank is continuing its disciplined approach to monetary policy, aimed at curbing inflation and stabilising the economy.
“These actions have yielded measurable progress: relative stability in the FX market, narrowing exchange rate disparities, and a rise in external reserves to over $40 billion as of December 2024.”
Cardoso reiterated that the goal of the CBN is to ensure that monetary policy remains forward-looking, adaptive, and resilient.
Read also: CBN’s reforms restoring macroeconomic stability, confidence — Cardoso to investors
In addressing our economic challenges, collaboration is key: “Managing disinflation amidst persistent shocks requires not only robust policies but also coordination between fiscal and monetary authorities to anchor expectations and maintain investor confidence,” Cardoso said.
“Our focus must remain on price stability, the planned transition to an inflation-targeting framework, and strategies to restore purchasing power and ease economic hardship,” he added.
The CBN also focused on strengthening the banking sector, introducing new minimum capital requirements for banks (effective March 2026) to ensure resilience and position Nigeria’s banking industry for a $1 trillion economy.
These reforms and developments reflect the Bank’s commitment to creating an enabling environment for inclusive economic development. However, achieving macroeconomic stability requires sustained vigilance and a proactive monetary policy stance.
“As we shift from unorthodox to orthodox monetary policy, the CBN remains committed to restoring confidence, strengthening policy credibility, and staying focused on its core mandate of price stability,” Cardoso stated.
He said moving from the exchange rate targeting framework to the inflation targeting framework aligned with the apex bank’s determination to bring inflation upsurge under control in line with its price stability mandate.
Inflation uptick has remained a major concern to the CBN and is the time to use monetary policy tools to control it.
