Central Bank reiterates dedication to price-stability focused economic strategy

The Central Bank of Nigeria has reiterated its dedication to fostering a stronger relationship with the academic and research community, particularly as the country moves closer to adopting a full-fledged Inflation Targeting monetary policy regime.

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This commitment was conveyed by the CBN's Deputy Governor in charge of Economic Policy, Dr Muhammad Abdullahi, during a strategic meeting with the Nigerian Economic Society and the academic community in Abuja, which was facilitated by the CBN on Monday.

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Dr Abdullahi deemed the dialogue as both timely and essential to Nigeria's ongoing economic reform programme, and he addressed a gathering that included scholars, directors, and policy experts as part of a sensitisation programme.

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The deputy governor explained that the transition to an inflation-targeting framework signifies a significant shift towards a more transparent, forward-looking, and rules-based monetary policy system that prioritises long-term price stability.

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He noted that inflation targeting will serve as a crucial nominal anchor for the Nigerian economy, guiding market expectations and reducing the impact of supply-side shocks to improve transparency, accountability, and the overall credibility of monetary policy.

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According to Dr Abdullahi, stabilising inflation expectations will help lower risk premia, support long-term investment plans, and enable policymakers to look beyond short-term disruptions, which is particularly important given the current global uncertainties, including geopolitical tensions and volatile energy prices.

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He highlighted several key reforms that have been implemented to support the transition, including the return to orthodox monetary policy tools, withdrawal from quasi-fiscal activities, and the strengthening of institutional independence.

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Additionally, Dr Abdullahi mentioned that major foreign exchange market reforms, such as rate unification and the deployment of electronic trading platforms, have reduced volatility and improved price discovery, while measures like bank recapitalisation and improved prudential oversight have further stabilised the financial sector.

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He also noted that enhancements in policy coordination with the fiscal authority and communication have increased coherence across monetary operations, and 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.

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Dr Abdullahi attributed these outcomes to sustained monetary tightening and improved policy discipline, and he expressed confidence that Nigeria is firmly on track to achieve low and stable inflation, with a medium-term target of steering inflation into a single-digit range of 6–9 per cent, barring major external shocks.

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He emphasised that achieving this target will require sustained policy discipline, anchored expectations, and a credible institutional framework trusted by markets, and Dr Victor Oboh, the Director of the Monetary Policy Department at the CBN, reaffirmed the CBN's commitment to strengthening collaboration with the NES.

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Dr Oboh stated that this collaboration is part of efforts to enhance monetary policy effectiveness and deepen macroeconomic stability, and he noted that the success of any monetary framework, especially inflation targeting, depends on technical capacity and also on public trust and effective communication.

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According to Dr Oboh, academics, researchers, and thought leaders play a vital role in shaping narratives, influencing expectations, and building the evidence base for sound policy decisions, and he acknowledged potential challenges, including short-term trade-offs and the need to reinforce institutional credibility.

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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, and the President and Chairman of the Council of the NES, Dr Baba Musa, praised the CBN for its bold and reform-minded approach to monetary and financial sector management.

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Dr Musa commended the apex bank for its openness, policy direction, and willingness to collaborate with the academic community, and he reaffirmed the commitment of NES to support the CBN's stabilisation efforts, stating that Nigeria needs a credible Central Bank, and the Nigerian Economic Society needs a Central Bank worth standing with.