Central Bank of Nigeria (CBN) Deputy Governor, Economic Policy Directorate, Dr. Muhammad Sani Abdullahi, has said the apex bank's transition to an inflation-targeting framework marked a significant shift toward a transparent, forward-looking, and rules-based monetary policy system anchored in long-term price stability.
Abdullahi emphasised that inflation targeting would serve as a crucial nominal anchor for the Nigerian economy, adding that by guiding market expectations and reducing the impact of supply-side shocks, the framework will improve transparency, accountability, and the overall credibility of monetary policy.
This came as the CBN drew strong global recognition after being named 'Central Bank of the Year' by Central Banking, an internationally acclaimed financial policy and central banking publication, in its 2026 awards.
According to Central Banking, the recognition reflects the impact of a sweeping policy reset that is steadily restoring macroeconomic stability and rebuilding investor confidence citing "what the CBN has achieved is nothing short of remarkable."
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The commendation reflects a growing consensus among market participants and international observers that the apex bank, under the leadership of its governor, Olayemi Cardoso has steered the economy away from a period of deep uncertainty marked by currency instability, policy inconsistencies and weakened investor trust.
It also marks yet another feather in the Bank's cap, coming on the heels of a series of positive validations, including sovereign rating upgrades by Moody's and Fitch Ratings, as well as Nigeria's removal from the Financial Action Task Force grey list, all of which point to strengthening macroeconomic fundamentals and improving global perception.
Providing context to the scale of the challenge inherited and the policy response that followed, the report noted: "It was not an easy time. The removal of fuel subsidies and devaluation of the naira that took place as FX controls were lifted in 2023, led to a rapid rise in prices, with Nigeria's inflation rate hitting a 28-year high of 34.80 per cent by December 2024.
However, the CBN deputy governor spoke during a recent strategic session with the Nigerian Economic Society (NES), stressing that the dialogue was timely and essential to the ongoing economic reform programme in the country.
He noted that stabilising inflation expectations would help lower risk premia, support long-term investment plans, and enable policymakers to look beyond short-term disruptions.
With global uncertainties, including geopolitical tensions and volatile energy prices, putting pressure on emerging economies, he stressed the importance of a credible monetary anchor to bolster Nigeria's resilience.
In a statement by the central bank, Abdullahi highlighted several reforms already put in place to support the transition, including the bank's return to orthodox monetary policy tools, withdrawal from quasi-fiscal activities, and the strengthening of institutional independence.
He noted that major foreign exchange market reforms, including rate unification and the deployment of electronic trading platforms, had reduced volatility and improved price discovery.
He pointed out that additional measures, such as bank recapitalisation and improved prudential oversight, have further stabilised the financial sector.
He stated that enhancements in policy coordination with the fiscal authority and communication have also increased coherence across monetary operations.
According to him, these reforms are already yielding measurable outcomes, with headline inflation declining sharply from 34.8 per cent in late 2024 to 15.1 per cent by early 2026, driven by sustained monetary tightening and improved policy discipline.
Looking ahead, Abdullahi stated that Nigeria is firmly on track to achieve low and stable inflation, noting that the medium-term target is to steer inflation into a single-digit range of 6-9 per cent, barring major external shocks.
Achieving this, he said, will require sustained policy discipline, anchored expectations, and a credible institutional framework trusted by markets.
He expressed appreciation to participants for their continued commitment to national development and looked forward to a productive exchange of ideas.
Earlier, in his remarks, the CBN Director, Monetary Policy Department, Dr. Victor Oboh, reaffirmed the bank's commitment to strengthening collaboration with the NES as part of efforts to enhance monetary policy effectiveness and deepen macroeconomic stability.
He observed that the success of any monetary framework, especially inflation targeting, depends not only on technical capacity but also on public trust and effective communication.
He emphasised that academics, researchers, and thought leaders play a vital role in shaping narratives, influencing expectations, and building the evidence base for sound policy decisions.
While acknowledging potential challenges, including short-term trade-offs and the need to reinforce institutional credibility, he expressed confidence that the combined expertise of the CBN and NES will significantly advance Nigeria's monetary policy goals, building sound, evidence-based policy decisions.
President/Chairman, Council of the NES, Dr. Baba Yusuf Musa, praised the CBN for what he described as a bold and reform-minded approach to monetary and financial sector management. He commended the Bank for its openness, policy direction, and willingness to collaborate with the academic community.
Musa, who is also the Director General of the West African Institute for Financial and Economic Management, reaffirmed the NES's commitment to supporting the CBN's stabilisation efforts.
He said, "Nigeria needs a credible central bank, and the Nigerian Economic Society needs a central bank worth standing with", reaffirming the Society's willingness to collaborate closely with the bank on Nigeria's long-term economic path.
Nonetheless, in awarding the CBN, Central Banking publication stated,
"Nonetheless, Cardoso and his team implemented efforts aimed ultimately at enhancing macroeconomic stability, strengthening the country's FX market and restoring investor confidence. This was defined by disciplined orthodox monetary policy, institutional reforms and a commitment to rebuilding trust in Nigeria's financial system.
"Cardoso was clear from the outset that quasi-fiscal policies, introduced in breach of CBN rules to support the economy during COVID-19, would need to stop. These policies, where the central bank was often extending credit to the least productive segments of the economy, were causing inflationary pressure."
It also highlights one of the most critical pillars on its foreign exchange reforms, it states: "A vital achievement for the CBN was its overhaul of the FX market. The central bank transitioned to a 'willing-buyer, willing-seller' framework, replacing the multiple-window regime with a more transparent and market-driven system.
"Cardoso's team brought in the 'electronic foreign exchange matching system' (EFEMS), powered by Bloomberg BMatch, which has transformed FX trading through mandatory order submission, real-time regulatory visibility and enhanced price discovery. The CBN also introduced the 'Nigerian foreign exchange code', promoting ethical conduct among dealers. Critically, the central bank worked tirelessly to clear what Cardoso has referred to as a "once crippling" backlog of FX obligations owed to various sectors such as aviation and manufacturing, helping to restore credibility and improving business confidence."
On inflation management, the report underscored the central bank's return to orthodox monetary policy and its impact on price stability: "Cardoso and his team also made tackling inflation a top priority as part of a return to orthodox monetary policy. He raised interest rates sharply, from 18.75 per cent in 2023, to 27.5 per cent by November 2024. As a result of tight monetary conditions and other policies, inflation has now fallen sharply, from more than 32 per cent in December 2024, to 16.05 per cent in October 2025 and 15.10 per cent by January 2026, with food inflation at 8.9 per cent.
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"The easing of inflation and inflation expectations allowed the CBN to reduce its policy rate by 50 basis points to 27 per cent in September 2025 its first-interest rate reduction since 2020 and again by 50bp in February 2026 to 26.5 per cent. This cautious but responsive approach aims to protect macro stability while gradually easing the cost of borrowing."
The report also drew attention to ongoing efforts to strengthen the banking system through regulatory reforms and recapitalisation, it added: "Nigeria's banking system has proven relatively resilient given the economic upheavals of the past few years. But risks have emerged related to credit-concentration pressures, operational vulnerabilities and cyber threats. The CBN has striven to strengthen risk-based supervision and transition to Basel III, with the aim of further boosting resilience, improving capital quality and strengthening liquidity monitoring.
"It introduced a bank recapitalisation exercise in 2024, whereby banks must meet higher capital thresholds based on their licence type, and the capital must be in paid-up share capital and share premiums rather than based on reserves or retained earnings."
Summing up the scale of the turnaround and the effort behind it, the report concluded: "Central bank officials over the past 30 months have taken bold actions that have required courage, sacrifice and patience. The former top CBN official sums up his view of the effort: What the CBN has achieved is nothing short of remarkable."
