CBN Targets Single-Digit Inflation as Nigeria’s Economy Sees Positive Shift

The Nigeria’s economy, the Central Bank of Nigeria (CBN) is setting its sights on reducing inflation to single digits over the medium to long term. This commitment was reaffirmed by CBN Governor Olayemi Cardoso during a press conference in Abuja following the 299th Monetary Policy Committee (MPC) meeting on Thursday.

The announcement comes on the heels of a significant rebasing of Nigeria’s Consumer Price Index (CPI), which saw the country’s inflation rate drop from a staggering 34.8 per cent to a more moderate 24.8 per cent. Cardoso emphasized that the rebased inflation rate provides a more accurate reflection of the nation’s economic reality and aligns with international best practices.

Despite the improved inflation figures, the MPC opted to maintain the current Monetary Policy Rate (MPR) to ensure continued economic stability.

“Despite the positive shift in inflation figures, the MPC chose to sustain the existing MPR framework,” Cardoso stated. “We rely on data-driven decision-making, and the updated CPI better represents consumption patterns in Nigeria. We commend the National Bureau of Statistics (NBS) for this advancement.”

Cardoso reiterated the CBN’s commitment to closely monitoring both domestic and global economic risks, pledging vigilance in mitigating potential threats.

“We will stay the course and remain watchful. Inflation has remained excessively high for too long,” he said. “Our goal is to bring it down from double digits to single digits over time. With the policies we have in place, we believe we are on the right trajectory.”

Achieving this ambitious inflation target will require stronger coordination between monetary and fiscal authorities, Cardoso noted.

“Fiscal and monetary policies must work hand in hand. Neither can achieve this goal in isolation,” he stressed. “Now more than ever, policy coordination is crucial. We are witnessing positive changes, and it is imperative to not only sustain but also enhance them.”

Highlighting a recent monetary policy forum that successfully convened both fiscal and monetary authorities, Cardoso expressed optimism that enhanced collaboration would yield significant benefits for Nigeria’s economy.

In addition to addressing inflation, Cardoso provided updates on Nigeria’s foreign exchange reserves, revealing that as of February 14, the nation’s external reserves stood at $39.4 billion. However, data from the CBN’s website indicated a slight decline to $38.7 billion by February 19, a reduction of $261.5 million.

“The external reserves remain robust at $39.4 billion as of February 14, providing an import cover of 9.6 months for goods and services,” Cardoso said.

He credited recent CBN reforms, including the implementation of the electronic foreign exchange matching system (EFEMS) and the new foreign exchange (FX) code, for boosting investor confidence, stabilizing the naira, and increasing reserves.