The CBN’s monetary policymakers have warned that recent gains in stabilising the economy could be undermined by global trade tensions, oil market volatility and domestic cost pressures, even as inflation shows signs of easing.
At the July meeting of the Monetary Policy Committee (MPC), members noted that year-on-year inflation has begun to moderate and that exchange rate stability, stronger foreign reserves and a trade surplus were providing a firmer footing for the economy. But they cautioned that the outlook remained fragile.
Nigeria’s headline inflation eased for the fifth straight month in August, dropping to 20.12 per cent from 21.88 per cent in July, offering some respite to households struggling with high living costs.
Aku Odinkemelu, financial expert and corporate director, said inflation was “expected to continue its downward trajectory” thanks to tariff exemptions on staple grain imports, improved security in farming areas and stable petrol prices. However, he warned of “significant upside risks,” including higher diesel and electricity tariffs, insecurity in rural communities, floods and spillovers from global trade disputes.
Another member, Bala Bello, Deputy Governor at the CBN also described the short- to medium-term outlook as positive, but stressed that “ongoing trade tensions, persistent conflicts in the Middle East and Ukraine, and climate-related shocks have implications for emerging markets. Nigeria is not immune to these risks.”
Several members pointed to the uncertainty created by United States trade and fiscal policies. Bandele Amoo said these had altered global financial conditions and could hit Nigeria through “decline in fiscal revenue, decreased demand for Nigerian exports, rise in capital outflows, reduced capital inflows and high debt overhang.”
Emem Usoro highlighted inflationary pressures in the US, UK and China, warning that energy price volatility and supply-chain disruptions had forced central banks to adopt a more cautious stance.
“The modest but persistent strengthening of the U.S. dollar, coupled with renewed uncertainty over trade policy … warrants caution for emerging and frontier markets,” she said.
The April 2025 World Economic Outlook projected slower global growth of 2.8 per cent in 2025, down from 3.3 per cent last year, with trade expected to contract sharply.
Lydia Jafiya said the downgrade reflected “escalating trade tensions, geopolitical crisis, weaker growth in major economies and climate-related shocks.”
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Lamido Yuguda noted that oil and other commodity prices were expected to soften, underlining the need for Nigeria to maintain buffers. “The Bank should continue to monitor these market developments closely with a view to taking precautionary measures as may be necessary,” he said.
Other members flagged risks of fiscal strain and the need for tighter policy coordination. Phillip Ikeazor warned that global supply chain disruptions could feed imported inflation and shrink fiscal space, while stressing the importance of monetary-fiscal collaboration.
Still, some pointed to room for optimism. Mustapha Akinkunmi cited reduced naira volatility and rising reserves, while Murtala Sagagi said improving regional stability and stronger trade ties under the African Continental Free Trade Agreement were boosting investor confidence.
MPC Chairman and the Governor of the CBN, Yemi Cardoso said the committee’s tight stance was delivering results, with Nigerians showing more confidence in the naira.
But he cautioned that “clouds of uncertainty permeate the global outlook and while inflation appears to be generally easing across major economies, recurring price shocks, volatile commodity prices, and geopolitical tensions continue to shape global markets.”
