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By Nancy Onyewuchi
The Nigerian economy, like those of most other countries, has been experiencing hiccups due to vagaries in the international market stemming from political and socioeconomic upheavals that were, to a certain degree, unanticipated. It is for this reason, and others considered important, that the Central Bank of Nigeria (CBN) recently put in place policy measures to ensure that the public’s confidence in the economy remained stable.
Among these policies is one focused on monetary issues, aimed at tightening the fundamentals of the economy while using such instruments to stimulate economic growth and maintain overall financial stability.
Experts agree that some key actions taken by the leadership of the apex bank, such as reducing the Monetary Policy Rate (MPR) to 26.5 per cent, will go a long way to boost investment. The CBN has also moved to strengthen the banking sector by insisting on a new minimum capital requirement, just as it simultaneously launched the Nigeria Foreign Exchange Code to ensure transparency
It is important to note that the monetary policy committee (MPC) reduced the benchmark interest rate by 50 basis points to 26.5 per cent from 27 per cent in early 2026, signalling a shift away from aggressive tightening. Similarly, the banking sector recapitalisation policy, which took effect from March 2026, introduced new minimum capital requirements to ensure banking sector resilience and support a projected $1 trillion economy.
Spokesperson of the apex bank, Hakama Ali-Sidi, in a statement, gave an update on this policy instrument
“As of 6 March 2026, the recapitalisation exercise is progressing steadily. Thirty banks have met the new minimum capital requirements applicable to their respective license authorisations.
“In total, 33 banks have raised additional capital through rights issues, initial public offerings (IPOs), and private placements as part of the programme.”
She further said that the Central Bank of Nigeria will continue to maintain close supervisory engagement with regulated institutions to ensure full compliance with prudential and capital requirements.
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As earlier mentioned, the foreign exchange sector of the monetary economy has remained controversial owing to its centrality in day-to-day trade transactions, including imports, exports and other activities related to foreign direct investments (FDI). There have been concerns regarding transparency in its management and operations. To address these concerns, the CBN launched the Nigeria Foreign Exchange Code to promote integrity and efficiency, while continuing to move toward a “willing buyer, willing seller” model to stabilise the naira.
Despite the rate cut, the CBN maintains a cautious stance on liquidity, retaining a high Cash Reserve Ratio of 45 per cent to curb inflation, while promoting digital transactions. It is instructive to point out that the focus on growth and stability is not waning. The overarching theme is balancing inflation management with the need to stimulate economic activity and improve foreign reserves, which have hit a 13-year high, while enhancing financial system stability.
Economy watchers are confident that the reduction of the MPR to 26.5 per cent is a positive step in the right direction, as it is designed to make credit cheaper for businesses, with the cost of borrowing expected to fall significantly.
One of the main intentions of the new foreign exchange code is to increase market trust and inflows while boosting forex liquidity. Hinging on the theory of demand and supply, the Yemi Cardoso-led administration of the apex bank believes that aligning with free-market principles and allowing the forces of demand and supply to allocate forex resources would eliminate market distortions caused by artificial controls.
Inflation, especially its impact on ordinary Nigerians and how to bring it under manageable levels has remained a key economic drive of the CBN. So, the 45 per cent Cash Reserve Ratio (CRR) was introduced to limit the money supply. Previously, it was believed that an apparently uncontrolled money supply negatively affected efforts to control inflation.
Earlier, Cardoso had announced plans to introduce an Inflation Targeting Framework, marking a major shift in Nigeria’s monetary policy mechanism. This framework is designed to tackle the country’s persistent inflation problem, which has significantly eroded consumer purchasing power.
Inflation targeting, the cornerstone of his strategy, is a monetary policy approach in which a central bank sets an explicit inflation target and adjusts interest rates and other tools to achieve this goal. This approach provides a structured framework for controlling inflation, especially in Nigeria, where inflation has long been a persistent obstacle to economic stability.
This is evident in his aggressive monetary policy stance aimed at tackling Nigeria’s persistently high inflation rates, as reflected in the series of decisions made by the Monetary Policy Committee (MPC). Still pursuing this perspective, the Central Bank is enforcing strict cash withdrawal limits to encourage the use of digital channels and restore discipline in money supply and its inflationary component and tendencies.
• Onyewuchi lives in Abuja and writes for Magnificat Synergy Nig Ltd
