Monetary Policy Adjustments Have Helped to Lower Lending Rates Amid Disinflation

Eromosele Abiodun, Ndubisi Francis, James Emejo in Abuja and Nume Ekeghe in Lagos

Central Bank of Nigeria (CBN) Deputy Governor, Operations, Ms. Emem Usoro, yesterday said current monetary policy adjustments were supporting lower lending rates, as inflation continued to ease amid reforms by the apex bank.

Usoro stressed that inflation had declined to 16.05 per cent in October while the exchange rate stabilised below N1,500/$ with minimal volatility.

She spoke in Lagos at the opening of the CBN annual seminar for finance correspondents and business editors, with the theme, “Aligning Monetary and Fiscal Policies towards Achieving a Robust Financial System.”

Usoro stated that external reserves had exceeded $46 billion, providing over 10 months of import cover.

She attributed major achievement in the macro-economy to reform efforts by CBN Governor, Mr. Olayemi Cardoso, on assumption of office in September 2023.

Represented by CBN acting Director, Corporate Communications Department, Mrs. Hakama Sidi-Ali, Usoro said, “When the Governor, Olayemi Cardoso management team assumed office two years ago, the macroeconomic environment was challenging. 

“Inflation was high, the naira was unstable due to forex scarcity, external reserves and oil receipts were low, and the economy faced significant FX backlogs and dependence on ‘Ways and Means’ financing. These conditions stressed the financial system and highlighted the urgent need for reforms.

“Guided by strong and transparent leadership, the bank implemented well-sequenced and compliance-driven measures, including orthodox monetary policies, strengthened corporate governance, and the ongoing bank recapitalisation programme.

“These actions, aligned with the Federal Government’s reform agenda, have helped restore stability and improve key macroeconomic indicators.”

Usoro added that the achievements reflected the commitment of the central bank leadership under Cardoso and his team, and underscored the importance of the media in communicating the benefits and progress of reforms to the public.

She emphasised that effective communication strengthened public understanding and supports successful policy outcomes.

However, the central bank deputy governor pointed out that while progress had been recorded, more work was needed to improve macroeconomic fundamentals and the standard of living for Nigerians.

She said, “This makes partnerships among policymakers, regulators, and the media even more important. Aligning fiscal and monetary policies is essential to strengthening the financial system, enhancing regulation, and ensuring resilience, especially as technological innovation and digital finance continue to expand.”

Usoro explained, “Better coordination promotes transparency, accountability, policy discipline and credibility, leading to improved economic outcomes. The media also has an important role in explaining policies clearly and accurately to citizens.”

She said the theme of the seminar was timely, offering opportunity for open discussions and recommendations that will enhance understanding of current government reforms and the collaboration needed to ensure positive outcomes for Nigerians.

Usoro thanked the organisers of the seminar, particularly the director and staff of the Corporate Communications Department, for their efforts in ensuring that this year’s seminar was held.

She stated, “It is my hope that by the end of the seminar, you will have identified key actionable takeaways that will help improve interactions between our fiscal and monetary authorities, thereby better aligning our policies, enhancing policy outcomes, and ultimately improving the overall well-being of our beloved country, Nigeria.

“Be assured that we will carefully analyse and aspire to implement the recommendations of your discussions. Therefore, it is my sincere expectation that, at the end of your deliberations at this seminar, participants will better appreciate the time and resources invested by the bank to ensure you are adequately informed on our policies and programmes.”

Development economist and Lead Consultant to ECOWAS Commission, Professor Ken Ife, urged the CBN to strengthen the Loan-to-Deposit Ratio (LDR) policy as a tool to expand credit to the private sector and stimulate growth.

Speaking at the forum, Ife said enhanced liquidity to productive sectors was essential to sustaining the ongoing macroeconomic recovery. He stated that the LDR framework, when effectively enforced, would compel banks to channel more funds into real-sector lending rather than concentrating on low-risk investments.

According to him, the apex bank must remain focused on its core mandate of price stability, stating that sustained disinflation is the most impactful support it can provide to the financial system.

Ife highlighted improving foreign exchange inflows driven by the rerouting of Nigerian National Petroleum Company (NNPC) Limited revenues through the CBN, increased crude production, and refined product exports as crucial factors stabilising the naira and boosting reserves.

He praised the bank’s new FX code for enhancing transparency and attracting portfolio investments, diaspora remittances and export proceeds.

He said, “Steady Forex inflow thanks to re-routing NNPC revenue through CBN and increased crude production and Dangote export of refined products, to stabilise Forex and increase Foreign Reserves.

“New Forex Code Enhanced transparency and capacity for managed float, induced Foreign Portfolio Investment, Diaspora Remittance, and export revenue.

“Monetary policy decisions like setting the Monetary Policy Rate, or MPR must be made solely based on economic data, free from the political pressure of short-term fiscal needs.”