CBN Targets 6–9% Inflation, Warns of External Risks

The Central Bank of Nigeria (CBN) has set a medium-term inflation target of 6 to 9 per cent as it moves toward a full inflation-targeting monetary policy framework.

This was disclosed following a strategic engagement with the Nigerian Economic Society and academic stakeholders, where the apex bank outlined its reform direction and macroeconomic outlook.

Deputy Governor for Economic Policy, Dr Muhammad Sani Abdullahi, said the transition marks a shift toward a more transparent and rules-based policy system anchored on price stability.

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“Dr Abdullahi stated that Nigeria is firmly on track to achieve low and stable inflation. 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 added that the framework would help shape market expectations, reduce risk premiums, and support long-term investment planning.

However, he cautioned that external pressures remain a significant threat.

He pointed to “global uncertainties, including geopolitical tensions and volatile energy prices” as persistent risks facing emerging economies like Nigeria.

The CBN noted that inflation has already begun to moderate, declining from 34.8 per cent in late 2024 to 15.1 per cent by early 2026, driven by tighter monetary policy and improved institutional discipline.

“Achieving low and stable inflation will require sustained policy discipline, anchored expectations, and a credible institutional framework trusted by markets,” the statement noted that Abdullahi said.

The Bank also highlighted key reforms supporting the transition, including a return to orthodox monetary policy, the withdrawal from quasi-fiscal interventions, and major foreign exchange adjustments such as rate unification and electronic trading platforms.

According to the apex bank, these measures have improved price discovery, reduced volatility, and strengthened financial system stability.

On collaboration, the Director of Monetary Policy, Dr Victor Oboh, stressed the importance of trust and communication in making inflation targeting effective.

“The success of any monetary framework, especially inflation targeting, depends not only on technical capacity but also on public trust and effective communication.”

The President of the Nigerian Economic Society, Dr Baba Yusuf Musa, endorsed the reforms, stating:

“Nigeria needs a credible Central Bank, and the Nigerian Economic Society needs a Central Bank worth standing with.”

The engagement brought together academics and policymakers, many of whom expressed support for the CBN’s reform agenda and its commitment to long-term price stability.