Cardoso Outlines Strategies for Inflation Control
… CBN Projects Increased Diaspora Remittances
By Patience Ikpeme
The Central Bank of Nigeria (CBN) Governor, Mr. Olayemi Cardoso, has revealed that without the bank’s policy interventions, Nigeria’s inflation rate could have reached a staggering 42.81 percent by December 2024.
The CBN has also projected a significant increase in diaspora remittances, estimated to reach N31.7871 trillion by the end of 2024.
He spoke at the CBN’s 2025 Monetary Policy Forum, which brought together key stakeholders including ministers, heads of government agencies, and private sector representatives.
Cardoso explained that the CBN implemented a series of “bold policy measures” throughout 2024, including raising the Monetary Policy Rate (MPR) cumulatively by 875 basis points to 27.50 percent, increasing the Cash Reserve Ratio (CRR) for Other Depository Corporations (ODCs) by 1750 basis points to 50.00 percent, and adjusting the asymmetric corridor around the MPR. He emphasized that these interventions were crucial in preventing inflation from spiraling out of control. “Counterfactual estimates suggest that without these decisive policy interventions, inflation could have reached 42.81 percent by December 2024,” he stated.
The CBN Governor also highlighted key reforms undertaken in 2024 to strengthen the financial system and ensure macroeconomic stability. These included unifying multiple exchange rate windows to enhance efficiency in the foreign exchange market.
This reform, Cardoso noted, has yielded positive results, with remittances through International Money Transfer Operators (IMTOs) increasing by 79.4 percent in the first three quarters of 2024, reaching US$4.18 billion compared to US$2.33 billion during the same period in 2023. The CBN also cleared a backlog of foreign exchange commitments totaling US$7.0 billion, restoring market confidence and improving FX liquidity.
Further reforms included lifting restrictions on 41 items previously banned from accessing the official FX market, a measure introduced in 2015, and introducing new minimum capital requirements for banks, effective by March 2026, to bolster the resilience and global competitiveness of Nigeria’s banking sector. The CBN also launched the WIFI initiative under the National Financial Inclusion Strategy to bridge the gender gap in financial access and empower women. The recently launched Nigeria Foreign Exchange Code, built on six core principles, aims to promote integrity, fairness, transparency, and efficiency in the FX market.
Looking ahead to 2025, Cardoso stressed the importance of continued vigilance and a proactive monetary policy stance to tackle inflation. He cautioned that “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.”
He affirmed the CBN’s commitment to price stability, the planned transition to an inflation-targeting framework, and strategies to restore purchasing power and alleviate economic hardship. “As we move forward into 2025, I am optimistic that we have turned a corner and that disinflation is within reach,” Cardoso stated, while emphasizing the need for continued commitment to “bold, coordinated policy measures.”
Cardoso noted the emerging global optimism regarding potential improvements in capital flows to emerging markets as advanced economies move towards monetary easing. He emphasized that Nigeria’s ability to attract these inflows will depend on investor confidence in domestic reforms, particularly those focused on macroeconomic stability and delivering positive real returns on investment.
He reiterated the CBN’s commitment to restoring confidence, strengthening policy credibility, and focusing on its core mandate of price stability as it transitions from unorthodox to orthodox monetary policy. He pointed to improving FX liquidity and the gradual alignment of the naira with market fundamentals as evidence of the positive impact of CBN policies.
Earlier, Mohammed Sani Abdullahi, Deputy Governor, Economic Policy of the CBN, highlighted the liberalization of the foreign exchange market as a pivotal step toward unifying a fragmented system and reducing premiums driven by speculation. He noted the significant reduction in the average exchange rate premium following the introduction of the flexible exchange rate regime.
Abdullahi also pointed to the substantial increase in diaspora remittances, which are projected to reach N31.7871 trillion by the end of 2024, further strengthening the supply of foreign exchange and contributing to the stability of the naira. He acknowledged the challenges posed by persistent demand and supply-side shocks to the CBN’s disinflation efforts, emphasizing the importance of robust communication and stakeholder engagement.
