CBN: Inflation Could Have Soared Without Interventions

••Apex Bank Projects Diaspora Remittances to Reach N31.79tn
By Anastasia John E.

Abuja, Nigeria – The Central Bank of Nigeria (CBN) has revealed that without its various policy interventions, inflation in the country could have skyrocketed to 42.81% by December 2024. This disclosure was made by CBN Governor, Olayemi Cardoso, at the 2025 Monetary Policy Forum held in Abuja on Thursday. The forum brought together key stakeholders including ministers, heads of economic agencies, and private sector representatives.
Cardoso explained that the CBN implemented a series of “bold policy measures” throughout 2024 to combat rising inflation. These measures included raising the Monetary Policy Rate (MPR) by a cumulative 875 basis points to 27.50%, increasing the Cash Reserve Ratio (CRR) for Other Depository Corporations by 1,750 basis points to 50.00%, and adjusting the asymmetric corridor around the MPR. “Counterfactual estimates suggest that without these decisive policy interventions, inflation could have reached 42.81 per cent by December 2024,” Cardoso stated.
Beyond interest rate adjustments, the CBN also implemented significant foreign exchange reforms aimed at enhancing market efficiency. The unification of multiple exchange rate windows contributed to a substantial 79.4% increase in remittances via International Money Transfer Operators (IMTOs), reaching $4.18 billion in the first three quarters of 2024, compared to $2.33 billion during the same period in 2023. Other key FX interventions included clearing a $7 billion FX backlog, lifting restrictions on 41 previously banned import items, and introducing new minimum capital requirements for banks.
The CBN Governor emphasized the importance of maintaining a proactive monetary policy stance to achieve macroeconomic stability. He acknowledged that managing disinflation amidst ongoing economic shocks requires strong policy coordination between fiscal and monetary authorities. He reiterated 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.
Cardoso expressed optimism about Nigeria’s economic outlook, stating that the country has “turned a corner” and that disinflation is within reach. He stressed, however, the need for continued bold and coordinated policy measures to consolidate the progress made. He also noted that improved global capital flows to emerging markets could benefit Nigeria, contingent on investor confidence in domestic reforms, macroeconomic stability, and positive real returns on investment.
The CBN Governor highlighted the transition from unorthodox to orthodox monetary policies as crucial for restoring confidence, strengthening policy credibility, and prioritizing price stability. He noted the improving FX liquidity and the gradual alignment of the naira with market fundamentals, creating a more predictable environment for production, exports, and essential imports.
Earlier in the forum, CBN Deputy Governor, Economic Policy, Mohammed Sani Abdullahi, explained that the liberalization of the FX market was instrumental in unifying the fragmented system and curbing speculative premiums. He revealed that the average FX premium, which stood at 62.33% between January and May 2023, dropped dramatically to just 0.10% by June 2023 following the reform. Abdullahi also projected that diaspora remittances would reach an impressive N31.79 trillion when full-year data for 2024 is released, up from N12.48 trillion in 2023 and N22.73 trillion by Q3 2024. Despite these positive developments, he acknowledged the challenges posed by persistent supply and demand shocks in achieving a single-digit inflation target, emphasizing the importance of continuous engagement with stakeholders.