CBN reaffirms commitment to inflation-targeting monetary policy

The Central Bank of Nigeria (CBN) has reaffirmed its commitment to deepening engagement with the academic and research community as Nigeria progresses toward a fully-fledged Inflation Targeting (IT) monetary policy regime.

A statement issued by the CBN on Monday said its Deputy Governor in charge of Economic Policy, Dr Muhammad Abdullahi, said this during a strategic session with the Nigerian Economic Society (NES) and the academic community in Abuja.

Abdullahi described the dialogue as timely and essential to Nigeria’s ongoing economic reform programme.

He addressed a gathering of scholars, directors, and policy experts as part of a sensitisation programme.

The deputy governor said that the transition to an inflation-targeting framework marked a significant shift toward a transparent, forward-looking, and rules-based monetary policy system anchored in long-term price stability.

He said that inflation targeting would serve as a crucial nominal anchor for the Nigerian economy.

“By guiding market expectations and reducing the impact of supply-side shocks, the framework improves transparency, accountability, and the overall credibility of monetary policy.

“Stabilising inflation expectations will help lower risk premia, support long-term investment plans, and enable policymakers to look beyond short-term disruptions.

“With global uncertainties, including geopolitical tensions and volatile energy prices, putting pressure on emerging economies, a credible monetary anchor is important to bolster Nigeria’s resilience,” he said.

He highlighted several reforms already put in place to support the transition.

According to him, these include the return to orthodox monetary policy tools, withdrawal from quasi-fiscal activities, and the strengthening of institutional independence.

He also said that major foreign exchange market reforms, including rate unification and the deployment of electronic trading platforms, had reduced volatility and improved price discovery.

The deputy governor said that additional measures, such as bank recapitalisation and improved prudential oversight, had further stabilised the financial sector.

He said that enhancements in policy coordination with the fiscal authority and communication had also increased coherence across monetary operations.

According to him, these reforms are already yielding measurable outcomes, with headline inflation declining sharply from 34.8 per cent in late 2024 to 15.1 per cent by early 2026.

He said that the outcomes were driven by sustained monetary tightening and improved policy discipline.

Abdullahi said that Nigeria was firmly on track to achieve low and stable inflation.

“The medium-term target is to steer inflation into a single-digit range of 6–9 per cent, barring major external shocks.

“Achieving this will require sustained policy discipline, anchored expectations, and a credible institutional framework trusted by markets,” he said.

Also, Dr Victor Oboh, the Director of the Monetary Policy Department at the CBN, reaffirmed CBN’s commitment to strengthening collaboration with the NES.

Oboh said that it was part of efforts to enhance monetary policy effectiveness and deepen macroeconomic stability.

He said that the success of any monetary framework, especially inflation targeting, depended on technical capacity and also on public trust and effective communication.

According to him, academics, researchers, and thought leaders play a vital role in shaping narratives, influencing expectations, and building the evidence base for sound policy decisions.

Oboh acknowledged potential challenges, including short-term trade-offs and the need to reinforce institutional credibility.

He expressed confidence that the combined expertise of the CBN and NES would significantly advance Nigeria’s monetary policy goals, building sound, evidence-based policy decisions.

The President and Chairman of the Council of the NES, Dr Baba Musa, praised the CBN for what he described as a bold and reform-minded approach to monetary and financial sector management.

Musa commended the apex bank for its openness, policy direction, and willingness to collaborate with the academic community.

He reaffirmed the commitment of NES to support the CBN’s stabilisation efforts.

“Nigeria needs a credible Central Bank, and the Nigerian Economic Society needs a Central Bank worth standing with,” he said. (NAN)