Nigeria’s inflation rate continues to cool, slipping to 16.05 per cent in October from 18.02 per cent in September 2025 — a trend economists say reflects the impact of sustained monetary policy easing and far-reaching reforms by the Central Bank of Nigeria (CBN). The easing cycle has strengthened FX stability, boosted foreign reserves to $46 billion, and reinforced confidence in the macroeconomic environment. CBN Governor Olayemi Cardoso has consistently highlighted how recent policy decisions have made the naira more competitive and improved Nigeria’s investment climate for global investors, reports Assistant Editor COLLINS NWEZE
The Central Bank of Nigeria (CBN) says ongoing policy easing and structural reforms are steadily filtering into the wider economy, helping to stabilise the naira, ease lending rates, and support the continued moderation of inflation. According to the bank, its recent monetary policy actions reflect a deliberate strategy to restore macroeconomic stability after years of fiscal and external pressures. It added that lower lending rates are emerging as one of the most visible outcomes of its policy trajectory, underscoring the leadership’s commitment to strengthening the financial system.
The CBN noted that close alignment between fiscal and monetary policies has become indispensable at a time when technological innovation and digital finance are rapidly transforming the financial landscape. This coordination, it said, has enhanced the effectiveness of monetary tools and improved the transmission of policy decisions across sectors. At its 302nd meeting held on September 22 and 23, 2025, the Monetary Policy Committee (MPC) trimmed the benchmark interest rate by 50 basis points — from 27.5 per cent to 27 per cent. The move, the first rate cut since the tightening cycle began, signals a shift in policy direction as inflationary pressures begin to ease. The committee said the decision balances the need to support growth while maintaining stability in the foreign exchange market.
Early data appears to validate this stance. The National Bureau of Statistics (NBS), in its October 2025 Consumer Price Index (CPI) report, revealed that inflation fell to 16.05 per cent from 18.02 per cent in September. It added that on a year-on-year basis, the October 2025 headline inflation rate was 17.82 per cent lower than the 33.88 per cent recorded in October 2024 — a significant moderation despite differences in the CPI base year.
However, the NBS noted some upward movement on a month-on-month basis. The October 2025 inflation rate stood at 0.93 per cent, slightly higher than the 0.72 per cent recorded in September. This indicates that although prices continued to rise, the pace of increase was modest and broadly consistent with overall disinflation trends observed in the past months. Beyond inflation, other indicators are also pointing in a positive direction. The gradual strengthening of the naira, coupled with rising foreign reserves, suggests an improving economic outlook. These gains have contributed to renewed investor confidence and better stability in the foreign exchange (FX) markets.
Reflecting this trend, the International Monetary Fund (IMF) has projected a 3.9 per cent growth rate for Nigeria in 2025, citing ongoing reforms, FX market improvements, and a stabilising macroeconomic environment. The CBN attributes much of the progress to the FX reforms introduced under the leadership of Governor Olayemi Cardoso, as well as new Federal Government policies targeting improved local production, reduced forex demand pressures, and lower domestic prices. Looking ahead, analysts say sustaining these gains will require the CBN to maintain its FX reforms while fiscal authorities intensify efforts to boost foreign exchange earnings, particularly from gas, oil, and non-oil exports.
Exchange rate positions
The naira has achieved a notable milestone, strengthening by 3.5 per cent against the U.S. dollar over the past ten months, reaching N1,450/$ at the parallel market. This recovery, though modest, signals a crucial shift, driven by coordinated adjustments to fiscal and monetary policies by the Federal Ministry of Finance and the Central Bank of Nigeria (CBN).
The start of the year saw the naira trading at around N1,555/$. However, a brief period of instability saw the rate slip to a high of N1,597/$ by the end of April. The subsequent six months were marked by intense policy intervention. The naira briefly firmed up at N1,475/$ in October 2025 at the official market before settling at N1,500/$ at the parallel market yesterday, marking a 3.5 per cent gain from the January starting point.
CBN Governor Yemi Cardoso says naira is turning the corner, and becoming more competitive in the international markets. He said Nigeria’s economy has been fully restructured and is now resilient, with huge buffers against global risks.
He spoke during the Intergovernmental Group of Twenty-Four (G-24) press briefing at the IMF/World Bank Annual Meetings in Washington DC, US. Cardoso, who is the leader of the Nigeria delegation at the meetings, said the naira has equally emerged as a competitive currency, with the economy witnessing positive trade balances and large businesses moving from imports to export of locally produced goods and commodities.
According to him, the positive economic indicators have combined to create resilient and strong buffers, keeping the economy in great shapes. Speaking on the impact of the trade tariffs on the domestic economy, the CBN boss said the tariffs are less of problems for the country. “And for us again, oil is basically the only commodity that was so exposed to the tariffs, and the impact of that was relatively modest. We now have a more competitive currency with the results that, for once, we have a situation where we have a positive balance of trade surplus, and we expect it to be six per cent in GDP for some time.
“So basically, what is happening is a complete restructuring of the economy, where we are encouraging people to go into domestic production, and, of course, discouraging imports. And I think we were very fortunate, because a lot of the things that were needed to have been done, we did them much earlier, and as a result of that, we’re able to create resilience and buffers against potential shocks,” he stated.
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What other stakeholders are saying
The Director-General, the West African Institute for Financial and Economic Management (WAIFEM) Dr. Baba Musa, has called on government to ensure that 3.9 per cent growth for Nigeria in 2025 translate to decent jobs, rising incomes, improved productivity, and broader social welfare. In his report presented at the recently concluded 2025 IMF/World Bank Annual Meetings in Washington DC, titled: “Nigeria’s Economic Outlook at a Turning Point”, he said as Nigeria moves further into 2025, Nigeria’s economic story is one of resilience, renewal, and strategic recalibration.
Musa, who is also the President, Nigerian Economic Society, said Nigeria’s economic trajectory is increasingly encouraging with the International Monetary Fund (IMF) projecting real Gross Domestic Product (GDP) growth of 3.9 per cent in 2025, up from 3.5 per cent in 2024, with further acceleration to 4.2 per cent in 2026.
Musa said Nigeria in 2025 is at a critical inflection point, cautiously optimistic yet structurally fragile. “Gains in growth, inflation moderation, and investment confidence mark important progress, but the work is far from complete. To sustain the recovery, Nigeria must maintain macroeconomic stability, deepen structural reforms, and ensure that growth translates into tangible improvements for citizens. Achieving this requires collaboration among government, private sector, civil society, and development partners,” he said.
Musa said recent policy measures, ranging from fiscal consolidation to targeted monetary adjustments, have laid the groundwork for a sustainable growth trajectory. “The real test, however, lies not only in achieving stability but in ensuring that it translates into tangible socio-economic outcomes: decent jobs, rising incomes, improved productivity, and broader social welfare. If Nigeria deepens reforms, invests strategically in human capital, and leverages its structural advantages, the country can achieve not only recovery but inclusive and durable economic transformation,” he said.
He said the growth for Nigeria is underpinned by stronger oil production following operational improvements and policy reforms in the petroleum sector. “Recovery in services, particularly telecommunications, financial services, and transport, reflecting resilient domestic demand. Improved agricultural output, thanks to favourable weather patterns and government support for mechanisation and inputs,” he said.
He said the recent GDP rebasing has also given a more accurate reflection of the economy, capturing growth in high-potential sectors such as digital services, modular refining, and the creative industries. This expanded view highlights opportunities for job creation, innovation, and revenue generation that were previously underappreciated. According to him, inflation remains elevated but is gradually moderating.
Headline inflation declined to 18.02 per cent in September 2025, down from 20.12 per cent in August, reflecting improved food supply, seasonal harvests, and targeted interventions in the energy market. The Central Bank of Nigeria’s interest rate cut, the first since 2020, signals a nuanced policy shift: a deliberate effort to balance price stability with growth and employment objectives. This approach is consistent with modern macroeconomic management, where inflation targeting is tempered by the need to stimulate investment and production in key sectors,” he said.
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Speaking further, Musa said, “Investor sentiment is improving, illustrated by Shell’s approval of the HI Offshore Gas Project, expected to supply 350 million standard cubic feet of gas per day to Nigeria LNG. Economically, such projects deliver multiplier effects: they stimulate domestic suppliers, create high-skill and semi-skilled jobs, and strengthen Nigeria’s position as a reliable energy hub in Africa. They also enhance balance of payments stability, by promoting export-oriented production.”
he CBN under Cardoso is cultivating multiple FX sources to increase dollar inflows, boost dollar access to manufacturers and retail end users. From moves to improve diaspora remittances through new product development, the granting licenses to new International Money Transfer Operators (IMTOs), implementing a willing buyer-willing seller FX model, and enabling timely access to naira liquidity for IMTOs, the apex bank has simplified dollar-inflow channels for authorized dealers and other players in the value chain. The move has led to substantial accretion to the gross FX reserves and supported the stability of the naira.
Given that FX inflows to the economy are strategic in achieving monetary and fiscal policy stability, the CBN under Cardoso puts in a lot of efforts in attracting more inflows into the economy. Diaspora remittances to Nigeria, estimated at $23 billion annually, remain a reliable source of forex to the domestic economy. There are also other sources and policies that are being explored by the apex bank to keep dollar inflows coming.