It is my pleasure to welcome you to the Monetary Policy Forum 2025, an event that underscores the Central Bank of Nigeria’s unwavering commitment to improving communication, fostering dialogue, and collaborating on the critical issues shaping monetary policy. This year’s theme, “Managing the Disinflation Process,” could not be more timely as we navigate a complex and evolving economic landscape
This Forum is a focused platform for rigorous intellectual discourse, providing an opportunity to examine monetary policy formulation, implementation, and outcomes. Unlike broader economic conferences, our discussions here are designed to address monetary policy challenges with precision, offering evidence-based insights to enhance policy effectiveness.
The past year presented significant challenges, including persistent inflationary pressures exacerbated by global and domestic shocks. Despite these headwinds, our commitment to price and monetary stability has yielded measurable progress. We have seen relative stability in the foreign exchange market, a narrowing exchange rate disparities, and a rising external reserves of over US$40 billion as of December 2024.
Recent data from the National Bureau of Statistics indicate that inflationary pressures persist. As of December 2024, headline inflation stood at 34.80 percent, driven primarily by core inflation, while food inflation showed signs of moderation. Domestic structural challenges, exchange rate pass-through effects, and energy price adjustments continue to exert pressure on prices and economic activity. At the same time, we recognize that while structural factors play a significant role in Nigeria’s inflationary challenge, monetary dynamics have also contributed to price pressures.
The liquidity injections associated with unorthodox monetary policies, particularly since the COVID-19 pandemic, have created a significant overhang. While these measures were intended to cushion immediate shocks, they did not translate into commensurate productivity growth, fueling inflationary pressures and heightened foreign exchange volatility. Excess naira liquidity in the system has amplified demand-driven inflation, further exacerbated by supply-side constraints stemming from structural deficits. These dynamics underscore the importance of a disciplined and coordinated approach to monetary policy to restore stability.
In response, the Monetary Policy Committee initiated a tightening cycle using orthodox approaches. Throughout 2024, the Bank implemented several bold policy measures across six MPC meetings, including raising the Monetary Policy Rate (MPR) by a cumulative 875 basis points to 27.50 percent, increasing the Cash Reserve Ratio (CRR) of Other Depository Corporations (ODCs) by 1750 basis points to 50.00 percent, and adjusting the asymmetric corridor around the MPR. Counterfactual estimates suggest that without these decisive policy interventions, inflation could have reached 42.81 percent by December 2024.
Inflation erodes purchasing power, discourages investment, and exacerbates inequality. Managing the disinflation process requires a careful balance of policies that mitigate short-term costs while anchoring long-term stability. The CBN is fully committed to ensuring price stability while minimizing adverse effects on growth and livelihoods.
As we move forward into 2025, I am optimistic that we have turned a corner and that disinflation is within reach. However, we must remain committed to bold, coordinated policy measures to consolidate our progress.
Beyond monetary policy, the Bank undertook critical reforms to strengthen the financial system and ensure macroeconomic stability:
• Unified multiple exchange rate windows to enhance efficiency in the FX market. This reform yielded tangible results, with remittances through International Money Transfer Operators (IMTOs) rising 79.4 percent in the first three quarters of 2024 to US$4.18 billion, compared to US$2.33 billion in the same period of 2023.
• Cleared a backlog of foreign exchange commitments totaling US$7.0 billion, restoring market confidence and improving FX liquidity.
• Lifted restrictions on 41 items previously banned from access to the official FX market, a measure introduced in 2015.
• Introduced new minimum capital requirements for banks, effective by March 2026, to strengthen the resilience and global competitiveness of Nigeria’s banking sector, positioning it to support the ambition of a US$1 trillion economy.
• Launched the WIFI initiative under the National Financial Inclusion Strategy, designed to bridge the gender gap in financial access, empowering women through financial services, education, and digital tools.
• Just this week, we launched the Nigeria Foreign Exchange Code, marking a decisive step forward for integrity, fairness, transparency and efficiency in our FX market. Built on six core principles, it represents a binding commitment from the financial community to rebuild trust and inspire confidence.
These reforms reflect our commitment to creating an enabling environment for inclusive economic development. However, achieving macroeconomic stability requires sustained vigilance and a proactive monetary policy stance.
Today’s Forum is an opportunity to generate actionable insights. 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. 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.
Globally, cautious optimism is emerging around potential improvements in capital flows to emerging markets, as advanced economies transition toward monetary easing.
Nigeria’s ability to attract these inflows will depend on investor confidence in our domestic reforms, particularly those ensuring macroeconomic stability and delivering positive real returns on investment.
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. Encouragingly, the results are becoming evident—FX liquidity is improving, fostering greater stability in the market. The naira is gradually aligning with market fundamentals, creating a more predictable environment for domestic production, exports, and essential imports. While challenges remain, we are confident that our policies are setting Nigeria on the path to sustainable economic stability.
Collaboration is key. Policymakers, the private sector, and civil society must work together to drive meaningful change. This Forum provides a platform for such engagement, allowing us to exchange ideas and refine our strategies for the road ahead.
I welcome all subject-matter experts, policymakers, scholars, and market economists to this critical discussion. Our goal is to ensure that monetary policy remains forward-looking, adaptive, and resilient.
In closing, I appreciate you taking the time from your busy schedules to join this important dialogue. Your insights are invaluable as we navigate the path ahead.
Thank you, and I look forward to a productive discussion.
On this note, I declare the 2025 Monetary Policy Forum open.
- Above is the content of an opening remarks presented by the Central Bank of Nigeria (CBN) Governor Olayemi Cardoso at the 2025 Monetary Policy Forum Held at the Fraser Suites, Abuja on Thursday January 30, 2025
