Nigeria’s Central Bank Targets Single-Digit Inflation Through New Framework
Nigeria’s central bank is progressing towards lowering inflation to single digits as it shifts to an inflation-targeting monetary policy framework. This initiative was outlined in a statement released by the Central Bank of Nigeria (CBN) following consultations with the Economic Association of Nigeria and academic leaders in Abuja.
During a session on March 18, 2026, Dr. Muhammad Abdullahi, the CBN’s Deputy Governor responsible for Economic Policy, described the transition to an inflation-targeting approach as a significant transformation in Nigeria’s monetary policy. He emphasized that this development is both timely and crucial for the nation’s ongoing economic reforms, stating that the new framework would enhance policy credibility and foster long-term price stability.
Abdullahi characterized the shift toward an inflation-targeting framework as a move towards a more transparent and forward-looking monetary policy based on the principle of long-term price stability. He explained that this framework will act as a vital anchor for the economy, influencing expectations and mitigating the effects of external shocks.
He further pointed out that inflation targeting serves as a critical nominal anchor for the Nigerian economy. Stabilizing inflation expectations will help lower risk premiums and encourage long-term investments, which are essential for sustainable economic growth.
The CBN highlighted that ongoing global uncertainties, including geopolitical tensions and fluctuating energy prices, underscore the urgent need for a reliable monetary anchor for emerging economies like Nigeria. The central bank noted several reforms already in place to facilitate this transition, such as a return to traditional monetary policy tools and a gradual exit from quasi-fiscal interventions.
The statement also referenced reforms in the foreign exchange market, including rate unification and the introduction of electronic trading platforms. These initiatives have not only improved price discovery but have also reduced market volatility. Additionally, the stability of the banking sector has seen a marked improvement due to better coordination with fiscal authorities, recapitalization efforts, and enhanced prudential oversight.
According to Abdullahi, these measures are beginning to yield positive results. Following sustained monetary tightening, the headline inflation rate dropped significantly from 34.8% in late 2024 to 15.1% in early 2026. Looking ahead, the CBN is optimistic about maintaining low and stable inflation in the medium term, aiming for a target range of 6-9%, provided there are no major external shocks.
To achieve this aim, Abdullahi stressed the importance of maintaining policy discipline, establishing solid expectations, and ensuring strong institutional credibility. Complementing this perspective, Dr. Victor Oboh, Director-General of the Department of Monetary Policy, highlighted the crucial role that collaboration with academic institutions plays in enhancing the effectiveness of monetary policy. He noted that successful inflation targeting relies not only on technical constructs but also on fostering public trust and effective communication.
In a show of support for the CBN’s reform initiatives, Dr. Baba Yusuf Musa, President of the Economic Association of Nigeria, praised the central bank’s direction and committed to ongoing collaboration to stabilize the economy. Participants in the session, which included representatives from various universities and policy institutions, echoed this sentiment, asserting that the move towards inflation targeting is a necessary step in fortifying macroeconomic stability. Recent data from the National Bureau of Statistics indicates that Nigeria’s headline inflation rate has marginally declined to 15.06% as of February 2026.
