The Central Bank of Nigeria (CBN) has decided to adopt orthodox monetary policy tools in 2025, shifting away from direct quasi-fiscal interventionist activities. In its 2024-2025 Monetary Credit Foreign Trade and Exchange Policy Guidelines, the CBN stated it would implement an explicit inflation-targeting framework to enhance monetary policy effectiveness.
CBN Governor Olayemi Cardoso said the bank would use orthodox tools, unlike before, to achieve its goals. “We want to go back to using an orthodox method to get where we intend to go.”
Since February 2024, the Monetary Policy Committee has increased the Monetary Policy Rate by 800 basis points, bringing the benchmark interest rate to 26.75%. This move has stabilized the naira, with a 57% increase in foreign exchange inflows within one year.
The CBN will continue using liquidity management tools: Open Market Operations, discount window operations, and repurchase transactions. The Cash Reserve Ratio for deposit liabilities will remain at 32.5% for commercial banks and 10% for merchant banks.
This shift aims to promote economic stability and growth in Africa’s largest economy.
