By Bassey Udo
At the end of the 303rd meeting of the Monetary Policy Committee (MPC) on Tuesday, the Central Bank of Nigeria (CBN) resolved to sustain its tightening monetary policy stance, by retaining the 27 percent controlling lending rate, though with a tweak to the Standing Facility corridor around the monetary policy rate (MPR) at +50/-450 basis points.
Also, the Cash Reserve Requirement (CRR) for Deposit Money Banks, which was adjusted previously to 45 percent, from 50 percent, was unchanged, alongside the rates for Merchant Banks at 16 percent, and 75 percent for non-Treasury Single Account (TSA) public sector deposits. Liquidity Ratio was kept at 30 percent.
The CBN governor, Olayemi Cardoso, who briefed journalists at the end of the meeting, said the Committee’s decisions were informed by the need to sustain the momentum of progress so far in the effort towards achieving low and stable inflation rate, which declined for the seventh consecutive month year-on-year in October to 16.05 percent, from 18.02 percent in September.
Similarly, food inflation recorded a significant drop to 13.12 percent, from 16.87 percent, while core inflation fell to 18.69 percent (year-on-year), from 19.53 per cent, within the same period.
The deceleration in inflation rate and other positive indicators, Cardoso noted, were the impact of the CBN’s sustained monetary policy tightening, stable exchange rate, increased capital inflows, and surplus current account balance, coupled with the reign of stability in the price of petrol as well as improvement in food supply.
Handshake between fiscal and monetary authorities
Beyond all these, a consistent handshake between the fiscal and monetary authorities not only created the atmosphere to boost investor confidence and improve capital flows towards sustainable growth in the economy, but also led to the upgrade of nation’s sovereign credit rating by major agencies, resulting in the recent removal of Nigeria from the Financial Action Task Force (FATF) grey list.
“The most effective way to build a strong and resilient economy is through close cooperation between the fiscal and monetary authorities,” he emphasized. “Joint committees between the Ministry of Finance and CBN must meet regularly and work closely.
“Nigeria’s move towards inflation targeting requires the highest level of coordination. Without strong collaboration between fiscal and monetary authorities, inflation targeting cannot succeed. We are well on that path, and we intend to maintain that collaboration because it has been the foundation of the stability the economy is now enjoy,” Cardoso said.
Fruits of collaboration, cooperation
A review of the gains of the continued collaboration with fiscal and monetary authorities showed some healthy fruits.
For instance, the banking sector has continued to show strength to support the growth, with indicators pointing at a sound health of most of the commercial banks within the bounds of regulatory thresholds, with at least 16 of them already achieving full compliance with the revised capital requirements under the ongoing recapitalization initiative of the financial system regulator, with additional 27 deploying various strategies to raise their capital base.
For the second quarter of the year, real gross domestic product (GDP), which highlights the aggregate volume of exchanges of goods and services in the economy for the period, maintained its positive trajectory, with a 4.23 percent (year-on-year) growth rate, compared with 3.13 percent in the previous quarter.
Also, the Purchasing Manager’s Index, which shows the capacity of the manufacturing and services sectors of the economy to finance imports of good and services for a period, increased significantly to 56.4 points in November 2025, the highest in the last five years, while gross external reserves increased by 9.19 percent a new high level of $46.70 billion as of November 14, 2025, from $42.77 billion as at the end of September 2025, enough to provide 10.3 months cover of import for goods and services.
Reaping benefits of decelerating inflation
On why the deceleration of inflation is not impacting the people, the CBN governor stressed the significance of macroeconomic stability, which has been the focus of the CBN drive to achieve sustainable growth in the economy.
He said indicators were looking a lot better, with inflation steadily dropping to about 16 percent, from the level inherited by the present administration more than two and half years ago, characterized by huge instability in the markets, with investors looking elsewhere.
Today, he said the economy has moved from instability to stability, pointing out that this would usher in investment, which would herald growth.
“With stability now achieved, investor confidence rises, investment follows, it will be easy to deceleration in inflation impacting the people with its benefits in the fullness of time,” the CBN governor said.
“Stability promotes growth, and a stable and enduring growth is what we need —not short-term gains that cannot be sustained,” he added.
Reforms making Nigeria more attractive to investors
On Nigeria’s external reserves performance, which shows the current balance of $46.7 billion, the highest in seven years, the CBN governor pointed at the drivers to include an increasingly strong and competitive Naira, which encourages non-oil exports; improved oil production capacity; rising international remittances, and the return of portfolio investors as a result of ongoing reforms that have made Nigeria more attractive, as well as the existence of a more open and transparent market.
To sustain the current stability in the exchange rate of the Naira against international currencies like the dollar, the CBN governor with the existence of an unprecedented open and transparent foreign exchange market, where willing buyers and willing sellers buy and sell freely, confidence in the market has been high in recent times.
This, he said, has attracted an average daily turnover of about $500 million, mostly without CBN participation, as against the practice in the past, where nothing happened without the intervention of the apex bank.
With the FOREX market now operating with discipline, consistency and without policy flip-flops, the CBN governor said people are able to plan and predict outcomes, a situation, he said, has resulted in the narrowing down of the spread between official and black-market rates to about 2 percent, from about 60 percent, at the onset of the market reforms.
Benefits from removal from the FATF grey list
On the Nigeria’s removal from the FATF grey list, Cardoso described it as an extremely significant development, underscoring the importance of continued inter-agency cooperation and collaboration between the CBN and other regulatory agencies, like Nigerian Financial Intelligence Unit (NFIU), Securities and Exchange Commission (SEC), Economic and Financial Crimes Commission (EFCC), the Ministry of Finance and all the security agencies.
However, he said the remains how to sustain the milestone achieved, by avoiding those negative practices that could make the country slip back into the FATF grey list again. being ed us into it.
“Being off the FATF grey list shows that Nigeria meets minimum global standards, which is very important for credibility. It is similar to when rating agencies issue a positive outlook. Once they do so, others take notice. Exiting the grey list sends a strong signal to investors, the international community and correspondent banks. When you are on the grey list, correspondent banks become cautious. Once you exit, they are far more willing to deal with Nigerian banks, and pricing becomes more competitive,” he said.
Besides, he said being off the FATF grey list changes the country’s status from almost a pariah state to a partner in terms of international remittances, with financial institutions willing to negotiate on equal terms.
With the changing macroeconomic atmosphere, the CBN governor said the vision of the Bank is clear – to be a trusted and respected central bank that promotes confidence in the economy.
Confidence, he said, only comes with trust and respect, pointing out that the turnaround currently being witnessed in the CBN, in particular, and the entire financial system, in general, was as a result of the transparency, openness and consistency in policy attained so far.
He stressed the need to sustain the momentum, by ensuring that efforts are made to sustain the transparency and build the confidence of investors, institutions and international partners to understand that the decisions by the monetary authorities are in the best interest of Nigerians.
