— Says return to past programmes will weaken credibility, fuel instability.
• Reforms helping Nigeria withstand external pressures.
The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has issued a stern warning against mounting pressure on the apex bank to resume large-scale intervention programmes. He cautioned that returning to such “unorthodox” measures would reverse the gains made in stabilizing the economy and further weaken the effectiveness of monetary policy.
Speaking on Thursday at the opening session of a Monetary Policy Committee (MPC) workshop in Abuja, themed *‘Strengthening Monetary Policy Effectiveness Towards Sustainable Macroeconomic Stability,’* Cardoso argued that past interventions created significant distortions in the bank’s balance sheet.
The Governor noted that the credibility the CBN has reclaimed over the last two and a half years is a direct result of its shift back to traditional, “orthodox” monetary policy. By prioritizing transparency and policy discipline over direct market interference, the bank has begun to regain the trust of international and local investors.
“The credibility we are now rebuilding and the progress achieved over the last two and a half years stem largely from returning to orthodox monetary policy anchored on transparency, policy discipline, and market confidence,” Cardoso said in a statement released on Sunday.
He warned that previous interventionist regimes—where the central bank funneled trillions into specific sectors—blurred the lines between fiscal and monetary responsibilities. This, he argued, hampered the bank’s primary mandate of price stability and diluted the impact of interest rate adjustments (the Monetary Policy Rate) on the broader economy.
According to Cardoso, the CBN has moved away from discretionary decision-making in favor of an evidence-based approach. He noted that policy shifts are now driven by rigorous data analysis, technical evaluations, and structured deliberations within the MPC.
“These efforts are part of our medium-term transition towards a clearer inflation-targeting framework that places price stability at the center of monetary policy,” Cardoso explained. He added that this transition requires deep-rooted institutional reforms and a sustained synergy between various economic institutions to ensure long-term success.
Reflecting on the state of the bank when the current management took over, Cardoso painted a picture of an institution in crisis. He cited a weakened autonomy, plummeting confidence in monetary policy, and an excessive reliance on non-conventional tools that failed to curb rising prices.
He specifically pointed to the Foreign Exchange (FX) market, describing it as previously “opaque and inefficient.” This lack of transparency, combined with poor coordination between the CBN and the Ministry of Finance, contributed to the volatility of the Naira and the subsequent spike in inflation.
“These structural issues contributed to rising inflation, exchange-rate instability, and declining investor confidence,” he said
Despite the challenges, the Governor expressed optimism, noting that current reforms are yielding results. He highlighted that under the current MPC structure, the bank has restored the primacy of the Monetary Policy Rate (MPR) as the lead instrument for managing inflation and economic expectations.
While acknowledging that inflation remains high and requires vigilant monitoring, Cardoso pointed to “early signs of moderation.” He also noted that transparency in the FX market has significantly improved price discovery, reducing the wild volatility that characterized previous years.
Earlier in the workshop, Muhammad Sani Abdullahi, the Deputy Governor in charge of Economic Policy, emphasized that the session was designed to foster technical exchange and collaborative dialogue. He noted that the CBN is committed to refining its policy formulation to better navigate global economic spillovers and domestic uncertainties.
As the CBN continues its push toward a full inflation-targeting regime, Cardoso’s message remains clear: the era of the central bank acting as a primary lender to the real sector is over, and the focus has returned squarely to defending the value of the currency and ensuring price stability.
