Cardoso rules out return to unorthodox policies as confidence returns

Olayemi Cardoso, governor, Central Bank of Nigeria (CBN), has said that the monetary authority will not revert to interventionist policy tools, arguing that ongoing reforms are beginning to restore credibility, improve price stability and strengthen confidence in Africa’s most populous economy.

Cardoso, speaking at the opening session of a Monetary Policy Committee (MPC) workshop in Abuja, said the central bank has shifted decisively back to orthodox monetary policy after what he described as a period of weakened institutional autonomy and policy distortions. “We are firmly committed to orthodox monetary policy, transparency and evidence-based decision-making,” Cardoso said. “These reforms are critical to restoring confidence in the Nigerian economy and strengthening macroeconomic stability.”

He said the central bank had inherited a system in which monetary policy credibility had been eroded, with blurred boundaries between fiscal and monetary functions, opaque foreign exchange management and extensive reliance on unconventional tools that weakened policy transmission. “At the inception of this administration, we faced weakened institutional autonomy, reduced policy credibility and reliance on unorthodox monetary tools,” he said. “These challenges limited the effectiveness of policy interventions and undermined transparency.”

Cardoso said the resulting environment contributed to persistent inflationary pressures, volatile exchange rates and declining investor confidence, but added that recent policy actions have begun to reverse those trends through tighter liquidity management, improved communication and a more rules-based monetary framework.

He said the central bank has re-established the policy rate as its primary signalling instrument while strengthening forward guidance and liquidity operations to anchor expectations across financial markets. “The policy framework now places renewed emphasis on conventional instruments, with the policy rate serving as the primary signalling tool,” he said. Cardoso added that improvements in foreign exchange market transparency had enhanced price discovery and reduced volatility, while also supporting a gradual stabilisation of the naira.

He said inflation, though still elevated, had begun to moderate, and that the economy was showing greater resilience to external shocks, including recent geopolitical tensions, as a result of improved policy coordination.

Beyond near-term macroeconomic outcomes, Cardoso said the central bank was strengthening its internal governance structure, with decision-making increasingly driven by data analysis, structured deliberation and more consistent communication practices.

He said these institutional reforms were part of a broader ambition to transition towards a more explicit inflation-targeting framework, which would require deeper technical capacity and stronger coordination across policy institutions. “We are strengthening decision-making processes through data-driven analysis and structured deliberation,” he said.

Cardoso also pointed to the recently concluded banking sector recapitalisation exercise as evidence of improved regulatory coordination and supervisory effectiveness within the financial system.

He reiterated that the central bank would resist pressure to reintroduce broad intervention programmes, saying such measures previously distorted the institution’s balance sheet and weakened policy credibility. “The renewed credibility of the central bank over the past two and a half years has largely stemmed from disciplined reliance on conventional policy tools,” he said.

Cardoso said the bank remained committed to transparency, evidence-based policymaking and institutional strengthening, adding that continuous adaptation would be necessary to sustain macroeconomic stability and long-term growth.

Earlier, Muhammad Sani Abdullahi, deputy governor for economic policy, said the workshop was designed to deepen technical capacity and improve policy formulation through structured dialogue and collaboration among policymakers, researchers and practitioners.

Abdullahi said the diversity of perspectives was essential to strengthening monetary policy effectiveness in a complex and uncertain global environment shaped by shifting domestic conditions and external shocks.

He said the programme would focus on policy transmission mechanisms, financial market development, analytical frameworks and institutional processes tailored to Nigeria’s economic realities.

Abdullahi expressed confidence that insights from the workshop would help reinforce ongoing reforms and support more effective monetary policy implementation across the central bank.