The Central Bank of Nigeria (CBN) has warned that persistent extra liquidity within the monetary system and expansionary election-cycle spending may undermine Nigeria’s macroeconomic stability, regardless of latest policy-driven good points.
The warning was delivered by CBN Governor, Yemi Cardoso, on the Nationwide Financial Council convention held on the Presidential Villa on Tuesday, February 10, 2026.
Whereas change price situations have improved and financial tightening has begun to yield outcomes, the apex bank stated Nigeria’s financial restoration stays fragile and susceptible to coverage slippages.
The CBN famous {that a} sizeable liquidity overhang continues to weigh on the monetary system, elevating the chance of renewed inflationary pressures and foreign money instability. It additionally cautioned that election cycles traditionally inject massive volumes of liquidity into the economic system, typically weakening financial coverage transmission and reversing reform good points.
Towards this backdrop, the Bank stated safeguarding value stability would require disciplined liquidity management, fiscal coordination and sustained structural reforms.
What CBN is saying
Cardoso stated Nigeria’s macroeconomic atmosphere stays uncovered to deep-seated structural and coverage dangers that financial tightening alone can’t resolve. He famous that though latest interventions helped stabilise markets, additionally they created long-term distortions that proceed to complicate liquidity administration.
- “No central bank can sustainably ship low and secure inflation alone the place structural drivers reminiscent of meals provide shocks, excessive power prices and infrastructure deficits dominate value formation.”
He disclosed that intervention programmes amounting to about N10.93 trillion supplied short-term financial assist however contributed to structural imbalances throughout the monetary system.
He added that restoring stability requires disciplined liquidity management, fiscal coordination and sustained structural reforms.
The CBN governor burdened that financial coverage stays a needed however inadequate instrument, noting that sturdy stability depends upon fiscal self-discipline, supply-side reforms and powerful institutional coordination.
Extra insights
The CBN governor outlined a number of structural constraints limiting the effectiveness of financial coverage inside Nigeria’s financial atmosphere. He defined that weak credit score transmission, shallow monetary markets and the dimensions of the casual sector cut back the pace and attain of coverage changes.
- Structural inflation drivers proceed to dominate value formation, limiting the affect of rate of interest adjustments.
- Liquidity administration faces operational boundaries in an atmosphere of persistent supply-side pressures.
- Improved income mobilisation and effectivity in public expenditure are required to bolster stability.
He added that coverage coherence between financial and monetary authorities serves as a important stability anchor, with the CBN sustaining a disciplined rate of interest path whereas fiscal authorities strengthen debt administration and public monetary governance.
Subnational fiscal behaviour now central to stability
The apex bank recognized state governments as more and more decisive actors in Nigeria’s macroeconomic stability framework.
In line with Cardoso, subnational governments now management roughly half of Federation Account revenues, giving them important affect over liquidity situations, inflation and development outcomes.
Larger revenues following latest reforms have expanded the macroeconomic affect of state-level fiscal choices.
Infrastructure funding on the subnational degree can assist cut back structural inflation pressures.
Sustainable borrowing frameworks are wanted to restrict future fiscal dangers.
He emphasised that collaboration between state governments and the monetary system is important for increasing monetary inclusion, enhancing credit score entry and sustaining reform momentum.
Why this issues
The CBN’s warning highlights the fragile stability between macroeconomic stabilisation and monetary growth in an election-cycle atmosphere. With liquidity situations nonetheless elevated, coverage credibility will rely upon coordinated fiscal restraint and disciplined financial administration.
- Extra liquidity raises the chance of renewed inflation and change price stress.
- Election-related spending may weaken financial coverage transmission.
- Structural price drivers proceed to restrict the effectiveness of rate of interest changes.
- Subnational fiscal behaviour now carries system-wide macroeconomic implications.
Analysts say the coverage stance alerts the apex bank’s dedication to prioritise stability at the same time as Nigeria pursues development, monetary deepening and exterior sector resilience.
What it is best to know
The CBN’s coverage course displays a broader shift towards orthodox financial administration and stronger institutional coordination throughout Nigeria’s macroeconomic framework. Whereas latest reforms have improved some stability indicators, policymakers say structural vulnerabilities stay important.
- Nigeria is transitioning towards an inflation-targeting financial framework.
- Exterior reserve development is more and more supported by diaspora remittances and non-oil inflows.
- Banking sector recapitalisation is anticipated to strengthen credit score growth and long-term funding capability.
- Fiscal self-discipline and structural reforms stay central to attaining sturdy value stability.
With macroeconomic reforms nonetheless unfolding, the apex bank says Nigeria’s stability good points stay contingent on disciplined liquidity administration, coordinated fiscal coverage and sustained structural transformation.
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