The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, on Wednesday defended the bank’s policy direction on inflation, foreign exchange management, SME financing, banking recapitalisation, customer complaints and external reserves, insisting that recent economic pressures stem largely from external shocks and that ongoing reforms remain on course.
Speaking while responding to journalists’ questions at the end of the two-day 305th Monetary Policy Committee (MPC) meeting in Abuja, Cardoso said the apex bank would sustain its current policy path after the committee retained the Monetary Policy Rate (MPR) at 26.5 per cent alongside other key monetary parameters.
Earlier, Pinnacle Daily reported that the MPC voted to retain the MPR at 26.5 per cent, the Cash Reserve Ratio (CRR) at 45 per cent for commercial banks, 16 per cent for merchant banks, and 75 per cent for non-TSA public sector deposits, while maintaining the standing facilities corridor at +50/-450 basis points around the benchmark rate.
Blames Inflation on External Shocks, Backs Current Policy Path
Addressing concerns over inflationary pressures, Cardoso said Nigeria had recorded 11 consecutive months of disinflation before the latest developments, which he attributed to external shocks.
“We’ve got to remember that we’ve been coming from 11 straight months of disinflation, and we believe that what we have now is something that has resulted from external shocks,” he said.
He argued that reforms already implemented had created buffers that helped shield the economy during the period, adding that recent international validation of Nigeria’s policy direction reinforced confidence in the CBN’s approach.
“We will continue on that path, we will sustain the course,” Cardoso said. “We’ve seen that as a result of adopting the right policies, we have consistently been on a path of disinflation.”
According to him, the current inflationary uptick is temporary, and the bank expects inflation moderation to resume, supported by policy tools already in place.
He also identified exchange rate stability as a central element of the CBN’s anti-inflation strategy, saying the bank remained committed to minimising exchange-rate pass-through effects.
SME Lending Requires Joint Government Effort – Cardoso
On lending to small and medium-sized enterprises (SMEs), Cardoso said expanding credit to the sector was not the sole responsibility of the central bank but required collaboration across government institutions.
“The effort to direct more credit in the SME sector is not the exclusive reserve of the central bank,” he said.
He cited the roles of the Ministry of Industry, Trade and Investment, the Bank of Industry and fiscal interventions in supporting smaller businesses.
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Cardoso said the CBN increasingly sees itself as a catalyst, using its convening power and available tools to encourage financial institutions to lend to businesses they may previously have avoided.
He disclosed that recent data reviewed by the bank showed an increase in fresh lending to SMEs.
“I’m very pleased to say that from what we’ve seen of recent… the volume of new credits going to the SME sector has increased,” he said.
He suggested that some commercial banks may be reassessing their lending strategies, potentially diversifying away from large-ticket transactions toward smaller businesses.
Defends Banking Recapitalisation Progress, Addresses Delayed Banks
Responding to questions on banking recapitalisation, Cardoso said Nigeria should acknowledge the progress made so far, pointing to strong investor participation in the exercise.
He noted that 33 banks had met recapitalisation requirements, describing the process as evidence of investor confidence in Nigeria’s economy.
“What has come out of the banking recapitalisation exercise… shows the resilience of Nigerian investors, the belief that investors have in our economy,” he said.
Cardoso added that the process had proceeded “relatively seamlessly.”
On banks yet to complete the process, he said many were dealing with legal, regulatory and judicial challenges and should not be compared directly with institutions that had more time to comply.
“When the central bank had cause to intervene, some of the time that they would have had similar to what the other banks had was taken away from them,” he said.
He maintained that the CBN remained fully engaged with affected institutions and supported efforts to overcome existing impediments.
FX Market Deepening, Reducing Need for CBN Intervention
Cardoso rejected suggestions of aggressive intervention in the foreign exchange market, arguing that reforms had fundamentally changed how the market operates.
“The foreign exchange system has changed considerably,” he said.
According to him, average daily FX turnover has risen sharply from roughly $100 million when the current administration took office to about $550 million currently, with turnover occasionally exceeding $1 billion in a day.
“The goal is for it to get to that $1 billion every day, and it will get there,” he said.
Cardoso argued that a deeper and more liquid market naturally reduces the need for central bank intervention.
“Where you have already a deepening foreign exchange market, where liquidity rules the day, there is very little need for you to intervene,” he said.
He disclosed that the CBN’s interventions represented only about 1.2 to 1.3 per cent of FX market turnover in 2025, which he described as minimal.
The governor credited reforms centred on willing buyer-willing seller arrangements, improved market conduct, transparency and better information symmetry for helping the market “find its own level.”
Dismisses Reserve Concerns, Says Position Improving
On external reserves, Cardoso urged against excessive focus on daily reserve movements, saying the figures are highly dynamic.
“What we have done, which is normal, is that in the course of daily activities, there may be a need to meet the requirements of various arms of government or loans, outstanding obligations due,” he said.
He stressed that inflows continue alongside outflows and insisted the reserve position was improving.
“I don’t want people to lose too much sleep over looking at our reserves every day,” Cardoso said.
According to him, reserve levels have already returned to where they were before the Iraq conflict period and should continue improving.
Reviews Customer Complaints, Multiple Bank Alerts
Cardoso also addressed concerns around banking customer experience, saying the apex bank had set up structures to tackle recurring complaints.
He disclosed that the CBN’s consumer protection department leads a committee involving representatives of deposit money banks and the top 10 microfinance banks that meets quarterly to address industry issues.
One area under review, he said, is the “multiplicity” of customer alerts and notices sent by banks.
“Perhaps there’s a way that some of these things can be consolidated,” he said, noting that excessive notifications often create confusion for customers.
The governor added that the CBN was also strengthening oversight around market conduct and compliance frameworks used by banks to improve customer experience and reduce conduct-related risks.
He described the effort as “work in progress,” aimed at continuously improving banking practices and consumer outcomes.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X