Nigeria entered the year with inflation easing but interest rates still at crisis levels, forcing the CBN to balance early signs of price relief against the risk of losing hard-won credibility.

The CBN in 2024 had fought inflation with one of its most aggressive tightening measures, raising interest rates five times and lifting the benchmark rate by 850 basis points in seven months. The aim was to drain excess liquidity, curb price pressures and restore policy credibility after years of loose monetary conditions.

The move pushed the benchmark interest rate above 27 per cent. In the early part of the year, the CBN faced a delicate choice of either easing or keep policy environment tight until inflation was firmly under control.

The bank stood midway and held rates.

Caution on rates
Inflation slowed steadily through 2025, giving the monetary policy committee room to hold rates. By November, annual inflation had fallen to 14.45 per cent, the lowest level in five years and the eighth consecutive month of moderation. Food inflation also declined, helped by improved harvests and easing supply pressures.

With this gain, many anticipated that the CBN might ease interest rate.

The Monetary Policy Committee (MPC) held the benchmark rate at 27.5 per cent for most of the year, cutting it only once by 50 basis points in September, before holding again in November.

The committee’s decision was underpinned by the need to sustain the progress made so far towards achieving low and stable inflation.

“The Committee was of the view that the steady deceleration in inflation across the three measures (headline, core and food) in October 2025, suggests that the lagged impact of previous tight policy measures is expected to continue in the near term.
“Thus, maintaining the current stance of policy, amidst lingering global uncertainties, would allow the effect of previous policy rate hikes to sufficiently transmit to the real economy and further reduce prices,” Mr Cardoso said at the end of the meeting.

For businesses and consumers, the impact was immediate. Loans remained costly and small businesses continued to struggle with access to credit.

Control
During the period, the CBN also focused on controlling liquidity in the financial system.
In September, the MPC imposed a 75 per cent Cash Reserve Ratio (CRR) on non-TSA public sector deposits, effectively locking away idle government funds held by commercial banks. This reduced the risk that excess liquidity would fuel inflation or currency speculation, even as rates were marginally cut.

The bank also adjusted its standing lending and deposit facilities, narrowing and reshaping the interest rate corridor. These changes discouraged banks from parking surplus funds with the CBN while penalising over-reliance on its lending window.

In its final meeting of the year, the CBN also adjusted the Standing Facility corridor around the MPR to +50/-450 basis points,a move aimed at discouraging banks from keeping idle funds with the CBN and encouraging more lending into the economy.

It also retained the Cash Reserve Ratio at 45 per cent for deposit money banks, 16 per cent for merchant banks, and kept the Liquidity Ratio at 30 per cent, reflecting a continued focus on disciplined liquidity management while maintaining tight financial conditions for banks.

Forbearance
Banks operating under regulatory forbearance faced tougher rules. In June, the apex bank directed banks under regulatory forbearance to halt dividend payments to shareholders, defer bonuses to directors and senior management, and suspend investments in foreign subsidiaries or offshore ventures.

Those with weak capital positions were barred from paying dividends or bonuses and restricted from new offshore investments, reinforcing financial discipline and reducing hidden risks.

Some of Nigeria’s largest banks, including Zenith Bank, FirstBank, and Access Bank were affected by the policy, the CBN said, is part of efforts to strengthen capital buffers and encourage internal capital retention in the banking sector.

Rules-based policy
Governor Cardoso repeatedly emphasised the move from discretionary, unorthodox measures to a rules-based framework focused on price stability. That approach shaped decisions across foreign exchange, banking supervision and payments.

The CBN introduced a Nigerian Foreign Exchange Code, ended extensions for the repatriation of export proceeds, and enforced strict timelines for bringing foreign earnings home.

These steps helped improve transparency, FX discipline and reduced uncertainty in the market.

For exporters and corporates, the rules became tougher. For the economy, FX flows became more predictable.

ATM/ POS
ATM fees were also revised, making charges for withdrawals from other banks’ machines clearer while keeping own-bank withdrawals free. The policy which takes effect from 1 January 2026, sets a daily ATM withdrawal limit of N100,000 per customer, with a weekly ceiling of N500,000.

The weekly limit applies across all channels, including ATMs and point-of-sale (POS) devices.

The new rules replace the previous limits under the 2022 guidelines, which capped daily ATM withdrawals at N20,000, and N100,000 per week showing a major shift in the management of cash in the economy.

Point-of-sale terminals were subjected to mandatory geo-tagging, linking devices to physical locations to combat fraud and cloned machines.

In August, the CBN ordered banks, fintech companies and other licensed payment operators to install GPS tracking on all Point of Sale (PoS) terminals, in a bid to tighten oversight of electronic transactions.

“This initiative is designed to ensure that all PoS terminals are traceable and that transactions are secure. Terminals operating outside their registered location will be flagged, and non-compliant devices will be deactivated,” it said.

Diaspora
The CBN also looked outward. It earlier in the year introduced the Non-Resident Nigerian Ordinary Account (NRNOA) and Non-Resident Nigerian Investment Account (NRNIA) targeted at Nigerians in diaspora.

New accounts were created for non-resident Nigerians, alongside a platform allowing Nigerians in the diaspora to obtain Bank Verification Numbers remotely.

Documentation for cross-border payments under the Pan-African Payment and Settlement System was simplified, particularly for small businesses.

The NRNOA enables Non-Resident Nigerians (NRNs) to rémit their foreign earnings to Nigeria and manage funds in both foreign and local currencies, while the (NRNIA) enables Non-Resident Nigerians (NRNs) to invest in assets in Nigeria in either foreign currency (FCY) or local currency (Naira). Account holders may maintain both a foreign currency (FCY) account and/or a local currency (Naira) account to facilitate transactions and participate in diverse investment opportunities.

These measures were aimed at boosting remittances, supporting foreign exchange inflows and strengthening external buffers, an area you can reinforce later with reserve figures.
By Ayodeji Adegboyega
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