LAGOS – The International Monetary Fund (IMF) has backed the Central Bank of Nigeria’s (CBN) tight monetary policy, urging a data-dependent approach until inflation is firmly defeated and public expectations anchor.
In its 2026 Article IV Consultation report released on Tuesday, the IMF Executive Board endorsed a “tighter-for-longer” stance, validating the apex bank’s strategy to tackle resurgent consumer price pressures which hit a high of 15.69% in April.
Directors welcomed the CBN’s progress toward adopting a full inflation-targeting framework, noting that clear communication and independent policy guidance will be vital to securing long-term price stability and market credibility.
“The Central Bank of Nigeria should maintain a tight monetary policy stance with a data-dependent approach until disinflation is entrenched and inflation expectations are anchored.” IMF Directors said.
“Directors welcomed progress toward adopting inflation targeting and encouraged steps to strengthen monetary transmission and communication.” IMF noted.
The Washington-based lender also urged the central bank to implement institutional steps that strengthen monetary policy transmission, ensuring benchmark interest rate changes effectively influence commercial lending and deposit rates.
Praising the commitment to a flexible exchange rate regime, the IMF noted the policy helped the naira appreciate 10% year-on-year against the U.S. dollar, while rebuilding external reserves to $46 billion in 2025.
The Fund recommended that future foreign exchange interventions remain strictly limited to smoothing disorderly market volatility, while advising Nigeria to reduce dependency on volatile, short-term portfolio inflows.
The IMF Executive Board welcomed recent tax reforms but noted that additional tax policy measures will likely be needed over the medium term to expand revenue collections.
Furthermore, directors highlighted deep concerns regarding unrecorded off-budget expenditures and complex financing instruments, demanding immediate acceleration of public financial management reforms to strengthen fiscal reporting, transparency, and country risk frameworks.
The Fund urged the government to urgently secure funding to scale up its structured cash transfer program, warning that acute poverty and food insecurity are expected to worsen under current global price pressures.
