Cardoso sees inflation easing further on tight policy, stable fx
Washington D.C || Olayemi Cardoso, Central Bank of Nigeria (CBN) governor has projected that inflation in Africa’s most populous economy is expected to maintain its downward trajectory after headline inflation fell to 18.02% in September—the lowest level recorded in three years.
The September data from the National Bureau of Statistics (NBS) marks the sixth consecutive monthly decline and a dramatic drop from the 34.19% peak reached in June 2024. It also signals growing investor confidence in the CBN’s inflation-fighting strategy, which has included an aggressive tightening cycle and structural reforms.
“We expect inflation to continue to trend downward in the near term,” Cardoso said at the IMF-World Bank Annual Meetings in Washington. “This is supported by tight monetary conditions, a stable naira, and increased food supply.”
To tame inflation, the CBN raised the Monetary Policy Rate (MPR) from 18.75% to 27.50% between July 2023 and July 2025, before easing slightly to 27.00% in September. The Bank also raised the Cash Reserve Ratio (CRR) for commercial banks to as high as 50% before lowering it to 45% last month, maintaining what it calls a “firm anti-inflationary stance.”
Core inflation slowed to 19.53%, while food inflation—typically the most volatile component—fell to 16.87%, reflecting improvements in agricultural supply chains and reduced logistics costs. These declines, according to the CBN, are being reinforced by ongoing reforms in the foreign exchange market.
The naira has stabilised in recent months following the unification of exchange rates and greater transparency in price discovery. The spread between the official and Bureau de Change (BDC) rates has narrowed to below 2%, a sharp improvement from double-digit gaps seen just a year ago.
“This stabilisation has helped reduce imported inflation,” the CBN said in its statement. “Improved FX liquidity and declining volatility are also strengthening price stability.”
Foreign reserves now exceed $43 billion, providing over eleven months of import cover. The CBN said this was due to sustained foreign exchange inflows and improved investor sentiment, driven by clearer policy direction and ongoing reforms.
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While inflation remains above the central bank’s target range, the pace of disinflation is beginning to ease pressure on households and businesses. Analysts say the moderation offers some policy space for future interest rate adjustments if current trends persist.
“The focus now is to consolidate these gains,” the CBN said. “Exchange rate stability, improved food production, and energy cost moderation will be crucial to sustaining this disinflation path.”
Cardoso added that the CBN is committed to restoring macroeconomic stability and anchoring inflation expectations. “Inflation affects every Nigerian,” he said. “Our job is to ensure that monetary policy supports a stable and predictable environment for growth.”
