KEY POINTS
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CBN Governor Olayemi Cardoso says inflation fell to 14.63% in September 2026.
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Nigeria’s foreign exchange reserves have exceeded $55 billion, according to the CBN.
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The government says consistent reforms are needed to attract investment and reduce borrowing costs.
The Central Bank of Nigeria, CBN, has urged the country to maintain its economic reform programme, arguing that consistent policies are essential to sustaining investor confidence and turning improved economic indicators into jobs, affordable credit and stronger growth.
Speaking at the 2026 International Monetary Fund (IMF) and World Bank Annual Meetings in Bangkok, Thailand, CBN Governor Olayemi Cardoso summarised Nigeria’s message to international investors in three words: “Stay the course.”
The meetings took place as Nigeria sought to move from economic stabilisation towards broader growth under the theme, “From Stability to Growth.”
Cardoso presented several indicators that he said showed progress following difficult economic adjustments. However, the challenge remains translating those improvements into tangible benefits for households and businesses facing high living costs and expensive financing.
According to the governor, headline inflation declined to 14.63 per cent in September 2026, from approximately 34.8 per cent at the end of 2024. Although prices are still rising, a lower inflation rate means they are increasing more slowly than before.
Nigeria’s foreign exchange reserves have also risen above $55 billion, their highest level in 18 years, according to Cardoso. The stronger reserves provide a buffer against external shocks and support the country’s ability to meet international obligations.
The CBN governor also cited the banking sector recapitalisation programme, through which financial institutions raised ₦4.65 trillion in fresh capital. More than 70 per cent of the funds reportedly came from domestic investors.
Cardoso described the level of local participation as a sign of confidence in the banking sector’s resilience and long-term prospects.
Nigeria has also received a positive signal from international credit rating agency Fitch, which revised the country’s outlook from stable to positive. The development could support investor sentiment, although sustained improvements will depend on the country’s economic performance and policy direction.
Cardoso acknowledged the sacrifices Nigerians had made during the reform process and stressed that policy consistency would be necessary to consolidate the gains.
One of the major developments discussed at the meetings was the CBN’s decision to reduce the Monetary Policy Rate (MPR) from 26.5 per cent to 23 per cent in September 2026.
The MPR serves as a benchmark for interest rates across the banking system. Reducing it can create room for lower borrowing costs, although commercial banks do not necessarily pass on the reduction immediately or in full.
For manufacturers, small businesses and entrepreneurs, cheaper loans could make it easier to finance equipment, expand operations and employ more workers. Households could also benefit if lending rates decline.
However, the extent of the impact will depend on banks’ lending decisions, inflation trends and broader economic conditions.
Cardoso discussed Nigeria’s monetary policy approach during an IMF seminar titled “How Central Banks Decide”, moderated by the Fund’s First Deputy Managing Director, Dan Katz.
The discussion examined how central banks make policy decisions, maintain institutional independence and communicate their choices to the public.
Cardoso said Nigeria’s monetary policy framework attracted interest, particularly the composition of the CBN’s Monetary Policy Committee, which includes external members and representation from the government’s economic management structure.
He argued that the effectiveness of such arrangements depends on the integrity, independence and competence of committee members rather than their official positions.
The governor also stressed the need for independent judgement to prevent groupthink, in which decision-makers conform to prevailing opinions instead of critically assessing economic evidence.
For Nigeria, the central issue is whether monetary policy can continue reducing inflation while creating conditions for productive investment. Cardoso said achieving single-digit inflation remained a medium-term objective.
The success of the interest rate cut will ultimately depend on whether businesses gain access to more affordable credit without reversing progress in controlling inflation.
Naira Stability Boosts Investor Confidence
Cardoso also pointed to the narrowing gap between Nigeria’s official and parallel foreign exchange rates as evidence of improved market stability.
He recalled that the dollar had previously traded at a premium of about 60 per cent in the parallel market compared with the official rate. According to him, the difference had narrowed to between three and four per cent.
The reduction in the gap suggests that the two markets have moved closer together, potentially reducing uncertainty for businesses and investors that need foreign exchange.
Cardoso said the development had strengthened confidence in long-term financing denominated in naira, adding that concerns about persistent currency depreciation had receded considerably.
Finance Minister and Coordinating Minister of the Economy Taiwo Oyedele also acknowledged the improvement, attributing part of the naira’s greater stability to monetary policy reforms implemented by the CBN.
During engagements with international credit rating agencies, including S&P Global, Moody’s and Fitch, Nigerian officials discussed what would be required for the country to attain investment-grade status in the medium term.
Cardoso said policy consistency, credible institutions and effective coordination between fiscal and monetary authorities would be essential to achieving that goal.
The finance minister warned that monetary policy alone could not sustain the recovery. He noted that despite economic growth of approximately 4.5 per cent, leading businesses continued to face borrowing rates approaching 30 per cent.
Reducing inflation sustainably, he argued, could help create conditions for lower lending rates, encouraging investment and economic expansion.
Nigeria’s economic managers also addressed concerns about whether the reform programme would remain in place as the country approaches another election cycle.
Oyedele ruled out a return to fresh subsidies or multiple exchange rates, while Cardoso said the government would not undermine the difficult reforms already implemented.
The officials also emphasised the importance of transparency, reliable economic data and consistent communication in managing investor expectations.
Policy reversals or uncertainty could complicate efforts to attract long-term capital, while sustained and predictable policies could make it easier for businesses to plan investments.
However, maintaining reforms alone may not guarantee immediate improvements in living standards. The government must also contend with the cost of living, high commercial lending rates and the need to create productive employment.
