CBN Targets Single-Digit Inflation as Cardoso Briefs Senate on Economy

The Central Bank of Nigeria (CBN) has reaffirmed its commitment to reducing inflation to single digits over the medium term through data-driven monetary policy and improved transmission of its policy decisions across the economy.

CBN Governor Olayemi Cardoso disclosed this during the bank’s statutory briefing to the Senate Committee on Banking, Insurance and Other Financial Institutions on Wednesday, July 22, 2026.

Cardoso presented an assessment of Nigeria’s economic performance during the first half of the year, highlighting progress in inflation moderation, foreign-exchange stability, external reserve accumulation and banking-sector reform.

Headline inflation eased marginally to 15.91 percent in June from 15.93 percent in May, ending three consecutive months of acceleration.

The 12-month average inflation rate also declined for a sixth consecutive month to 17.63 percent from 18.36 percent.

However, food inflation increased to 17.52 percent from 16.96 percent, demonstrating that supply constraints continue to place pressure on household expenses.

The persistence of food-price increases and renewed geopolitical uncertainty influenced the Monetary Policy Committee’s decision to retain the benchmark interest rate at 26.5 percent during its July meeting.

For the CBN to achieve single-digit inflation, monetary restraint will need to be supported by improvements in food production, transportation, energy supply and other areas beyond the direct control of interest-rate policy.

Cardoso also pointed to increased stability in the foreign-exchange market as one of the major gains recorded during the first half of 2026.

Greater currency stability has helped reduce imported inflation and contributed to the moderation in core inflation, which declined to 15.92 percent in June from 16.82 percent in May.

Nigeria’s gross external reserves increased to $52.52 billion as of July 17 from $50.47 billion at the end of May, supported by crude oil-related tax receipts and third-party inflows.

According to the CBN, the reserves can cover approximately 11 months of imports.

The governor also identified the completion of the banking-sector recapitalisation programme as a major achievement during the period.

The exercise increased capital buffers across the industry and strengthened the capacity of banks to withstand economic shocks, finance larger transactions and compete more effectively.

Although the recapitalisation improved financial-soundness indicators, the CBN has maintained that continued supervision will be necessary to protect asset quality and contain risks to financial stability.

Cardoso said the bank remained focused on evidence-based monetary policy, stronger policy transmission and reforms to Nigeria’s financial-market infrastructure.

For investors, the briefing reinforces the CBN’s decision to prioritise inflation and currency stability over an early reduction in interest rates.

A sustained fall in food inflation, continued stability of the naira and further reserve accumulation could create room for monetary easing.

Until those conditions are firmly established, borrowing costs are likely to remain elevated despite the gradual moderation in headline inflation.