CBN Signals Shift To Rules-Based Policy, Targets Price Stability

The Central Bank of Nigeria (CBN) has reaffirmed its transition toward a rules-based monetary policy framework, signalling a decisive move to anchor price stability and strengthen macroeconomic credibility.

Speaking at an engagement with the Nigerian Economic Society (NES) and members of the academic community, the Bank said the shift to inflation targeting marks a critical step in its ongoing reform agenda.

The Deputy Governor in charge of Economic Policy, Muhammad Sani Abdullahi, described the transition as “a significant shift toward a transparent, forward-looking, and rules-based monetary policy system anchored in long-term price stability.”

According to a statement that was issued by the apex bank on Sunday, Abdullahi stated that inflation targeting would serve as a credible nominal anchor for the economy by shaping market expectations and limiting the disruptive effects of supply-side shocks.

“By stabilising inflation expectations, we are able to lower risk premia, support long-term investment decisions, and allow policymakers to look beyond short-term shocks,” Abdullahi said.

He added that in the face of global uncertainties, including geopolitical tensions and energy price volatility, “a credible monetary anchor is essential to strengthen Nigeria’s economic resilience.”

The Deputy Governor outlined key reforms already implemented by the apex bank to support the transition. These include a return to orthodox monetary policy tools, withdrawal from quasi-fiscal interventions, and renewed emphasis on institutional independence.

He also highlighted foreign exchange market reforms such as rate unification and the introduction of electronic trading platforms, which he said have “reduced volatility and enhanced price discovery in the market.”

According to him, complementary measures including bank recapitalisation and strengthened prudential oversight have further stabilised the financial system, while improved coordination with fiscal authorities has enhanced overall policy coherence.

Abdullahi claimed that the reforms are beginning to yield results, with headline inflation declining significantly from 34.8 per cent in late 2024 to 15.1 per cent in early 2026. “This progress reflects sustained monetary tightening and improved policy discipline,” he said.

He expressed confidence that the country is on course to achieve low and stable inflation, with a medium-term target range of 6 to 9 per cent.

“Achieving this objective will require sustained discipline, well-anchored expectations, and a credible institutional framework trusted by markets,” he added.

Earlier, the director of the Monetary Policy Department at the CBN, Victor Oboh, stressed the importance of collaboration with the academic community in ensuring policy effectiveness.

“The success of inflation targeting depends not only on technical design but also on public trust and effective communication,” Oboh said. “Academics and researchers play a vital role in shaping expectations and building the evidence base for sound policy decisions.”

In his remarks, the President of the NES, Baba Yusuf Musa, commended the CBN’s reform-oriented approach and commitment to transparency.

“Nigeria needs a credible Central Bank, and the Nigerian Economic Society needs a Central Bank worth standing with,” Musa said, pledging continued collaboration to support the country’s long-term economic stability.

Participants at the session, drawn from universities and research institutions, also expressed support for the apex bank’s policy direction, describing the transition to inflation targeting as a necessary step toward strengthening macroeconomic stability.