Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso has warned that excess liquidity in the system could hamper macro-economic stability and erode current economic gains, noting that the economy is not yet out of the woods.
Cardoso stated this in his presentation at the just concluded National Economic Council (NEC) meeting in Abuja.
He said the large volumes of money still circulating within the financial system must be carefully managed to prevent renewed inflationary pressures.
Cardoso pointed out that election-cycle spending had injected significant liquidity into the economy and such inflows must be closely monitored to avoid undermining reforms that have helped stabilise prices and restored confidence.
He further identified global trade tensions as an external risk factor that could worsen domestic pressures, cautioning that monetary policy alone cannot sustainably deliver low and stable inflation, especially in an economy where food supply shocks, high energy and logistics costs, infrastructure deficits, and informality weaken policy transmission
The central bank governor said lasting stability would require fiscal discipline, improved revenue mobilisation, efficient public spending, and stronger coordination between fiscal and monetary authorities, adding that subnational governments play a critical role in managing liquidity and inflation, and states control about half of the federation revenue and significantly influence macroeconomic outcomes.
