James Emejo writes on the recent decision by the Central Bank of Nigeria to retain all key monetary policy parameters The renewed conflict in the Middle East has emerged as the biggest external threat confronting monetary authorities worldwide. Higher crude oil prices, supply chain disruptions and renewed inflationary pressures have forced several central banks to reassess earlier expectations about inflation and interest rates. For Nigeria, these developments have complicated the CBN’s own inflation projections. Cardoso admitted that the bank had expected inflation to be firmly on course towards single digits by early 2027 after recording 11 consecutive months of disinflation. That trajectory, however, was interrupted by shocks that neither Nigeria nor most global policymakers anticipated. Rather than dismiss the impact of those developments, the CBN Governor, Olayemi Cardoso, acknowledged that the external environment had fundamentally changed. The conflict has lasted much longer than expected, making inflation management more difficult. Yet, despite these pressures, he insisted the economy has demonstrated remarkable resilience. That resilience, according to him, reflects reforms implemented jointly by fiscal and monetary authorities, stronger policy coordination and improved macroeconomic management. It is this resilience that largely informed the MPC’s decision to maintain the Monetary Policy Rate at 26.5 per cent instead of tightening further or beginning premature easing. Stability as Bigger Achievement Perhaps Cardoso’s strongest message was that Nigeria has moved beyond the era of chronic macroeconomic instability. For him, stability itself is now the country’s biggest economic asset. He argued that without stable prices, a more predictable foreign exchange market and stronger reserves, investment cannot flourish and economic expansion becomes difficult. The governor maintained that the painful reforms implemented in recent years have created the platform upon which future growth will rest. Although many Nigerians are yet to feel the full benefits, he expressed confidence that the economy is gradually moving in the right direction. His argument is supported by several indicators highlighted after the MPC meeting. External reserves rose to $52.52 billion as of July 17 from $50.47 billion at the end of May, providing import cover of about eleven months—well above international benchmarks. Headline inflation also eased marginally to 15.91 per cent in June from 15.93 per cent in May, ending three consecutive months of increases. Core inflation moderated more significantly as exchange rate stability continued to reduce imported inflation. Although food inflation remains elevated because of supply constraints, the overall inflation trend suggests previous monetary tightening is beginning to produce results. For Cardoso, these developments validate the difficult policy decisions taken over the past two years. Reforms Paying Off Despite Delayed Inflation Target The governor did not shy away from admitting that the CBN’s earlier timeline for returning inflation to single digits has shifted. Instead, he attributed the delay almost entirely to external developments beyond Nigeria’s control. The important point, however, is that the underlying direction has not changed. According to him, inflation is still moderating, albeit gradually, indicating that monetary policy remains effective. He also emphasised that inflation cannot be defeated by monetary policy alone. Persistent structural rigidities—including supply bottlenecks and food production challenges—require stronger collaboration between fiscal and monetary authorities. That cooperation, he stressed, has become even more important in the current environment. The MPC similarly welcomed the federal government’s renewed commitment to policy coordination and implementation of reforms capable of strengthening macroeconomic fundamentals. Among these is Executive Order 9, which the committee believes could further improve fiscal outcomes. The CBN also encouraged continued efforts to raise crude oil production while unlocking opportunities in solid minerals and other productive sectors to diversify government revenue. Why CBN Is Standing Firm on Exchange Rate Reforms Another major takeaway from Cardoso’s engagement with journalists was his firm defence of Nigeria’s foreign exchange reforms. Despite periodic calls for official intervention to influence the naira’s value, the governor insisted the central bank would remain committed to a transparent, market-driven foreign exchange framework based on willing buyer-willing seller principles. In his view, exchange r
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