How economic reforms muted Middle East pressures, energy price surge in Nigeria

The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, said the impact of the United States/Israel and Iran conflict on Nigeria’s economy has been largely limited, attributing this to earlier economic reforms that strengthened the country’s buffers.

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Mr Cardoso disclosed this at the conclusion of the bank’s two-day Monetary Policy Committee (MPC) 305th meeting on Wednesday in Abuja. The governor stated that the committee retained the borrowing rate at 26.5 per cent amidst an inflationary surge in previous months.

According to National Bureau of Statistics (NBS) data, headline inflation year-on-year rose marginally for the second consecutive month to 15.69 per cent in April 2026 from 15.38 per cent in the preceding month, largely driven by an increase in the food component.

Briefing the press after the MPC deliberation, the central bank boss said the committee reviewed recent developments in the global and domestic economies and assessed the medium-term outlook.

He said inflation rose marginally for two consecutive months, largely induced by external shocks, especially the ongoing war between the US/Israel and Iran, which has exerted upward pressure on energy prices and transportation costs.

Mr Cardoso added that the committee recognised inflation’s transitory nature and remained confident that the current macroeconomic environment is sufficiently robust to support a return to disinflation.

Reforms

He explained that prior economic reforms introduced by the government mitigated the effects of shocks in the Nigerian economy, helping to reduce inflation.

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He said the reforms produced exchange rate stability, improvements in external reserve buffers, strengthened monetary policy transmission, and a well-capitalised banking system.

“However, available evidence indicates that the impact of the crisis on the Nigerian economy has been largely muted due to the benefits of prior policy reforms.

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“These include exchange rate stability, improvements in external reserve buffers, strengthened monetary policy transmission, a well-capitalised banking system, and ongoing fiscal consolidation, which have significantly bolstered the economy’s ability to absorb external shocks.

“As a result, the pass-through of global commodity and energy price shocks to domestic inflation has been significantly mitigated and would have been more pronounced in the absence of these reforms,” Mr Cardoso said.

The CBN governor also said the bank welcomed the recent sovereign rating upgrade amid prevailing external headwinds, underscoring the strength of the country’s macroeconomic fundamentals and reinforcing confidence in its reforms.

He added that the bank will necessarily maintain a vigilant position to anchor the inflation expectations further.

“Members were therefore of the view that a cautious and vigilant policy stance is necessary to anchor inflation expectations and safeguard macroeconomics,” Mr Cardoso stated.