Inflation is an economic situation where there is a continuing rise in the prices of goods and services, and since such a reality is always bad news for Central Banks across the globe, no one can blame CBN for constantly devoting a huge amount of time and resources to combat inflation in Nigeria when the need arises.
The Central Bank of Nigeria is no stranger to formulating vital policies to tame inflation, and its inflation targeting framework remains an important tool to resist inflation of prices and guarantee exchange rate stability.
According to top economists, concentration on price stability is absolutely vital based on undeniable proof that only price stability can guarantee the kind of sustainable growth every country dreams of. And since inflation automatically results in a nation’s currency losing its purchasing power, every country’s Central Bank frowns at it.
The first quarter of 2025 has been anything but predictable for the Nigerian economy, but thankfully, the inflation numbers have been easing up towards the end. Inflation dropped to 23.18 per cent in February and was expected to reduce further in March as evidence that the country’s economy was picking up, however, when March arrived, the National Bureau of Statistics (NBS) confirmed that our inflation rate surged to 24.23 per cent, emphasising the consistent pressure on household incomes, surging food prices, and the general high cost of living across Nigeria.
According to the NBS, the continued inflation was down to the rise in the prices of essential food and non-food items, as it massively affected the purses of several Nigerians who were fighting a losing war with their stagnant salaries and the nation’s economic uncertainty.
Stepping in to make life easier for citizens, the monetary authority, Central Bank of Nigeria (CBN), via its Monetary Policy Committee (MPC), stopped its policy rate tightening cycle at the first meeting in 2025, the first pause since May 2022. The decision was an effective deployment of monetary policy tools as it helped stabilise the naira in several markets.
Speaking during Cordros Asset Management seminar titled: “The Naira Playbook,” Director of Trading at Verto, Charlie Bird hailed the positive impact of CBN’s reforms, adding that the apex bank has definitely been doing the needful to affect Nigeria’s economic indicators positively.
He revealed that replacing the exchange rate targeting framework with inflation targeting framework was CBN’s way of proving it remains determined to combat inflation by any means necessary, which is in accordance with its price stability mandate.
Among its several efforts to tackle inflation, the Central Bank of Nigeria (CBN) recently organised the Monetary Policy Forum 2025, which brought together development partners, subject-matter experts, scholars, legislative workers, and private sector businessmen to discuss “Managing the Disinflation Process.” The forum was a gathering to aid the improvement of monetary policy communication while fostering dialogue and emphasising collaboration on critical issues shaping monetary policy.
Speaking at the event, CBN Governor, Olayemi Cardoso, disclosed that the apex bank is focused on sustaining price stability, transitioning to an inflation-targeting framework, and strategising to bring back sufficient purchasing power while easing economic hardship.
“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.
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,” he said.
