A member of the Central Bank of Nigeria (CBN) Monetary Policy Committee, Professor Murtala Sabo Sagagi, has warned that Nigeria’s ongoing fight against inflation could be undermined if fiscal spending is not properly controlled.
Sagagi raised the concern in his personal statement following the 304th Monetary Policy Committee meeting held in February, where policymakers reviewed inflation trends and broader macroeconomic conditions.
He cautioned that politically driven spending, particularly during election cycles, could reverse recent gains in disinflation.
“Close coordination between monetary and fiscal policy is essential,” he said, warning that increased fiscal releases associated with electoral periods could reignite inflationary pressures.
Sagagi stressed that the Central Bank of Nigeria must maintain active engagement with fiscal authorities to ensure responsible public spending.
He also noted that elevated lending rates across the banking sector could weaken the transmission of monetary policy to the real economy, despite recent policy adjustments.
According to him, persistent high interest rates suggest structural inefficiencies that may require macroprudential interventions.
The economist further highlighted insecurity and weaknesses in Nigeria’s agricultural sector as key risks to price stability.
He warned that disruptions in farming communities continue to affect food supply, while rising production costs for inputs such as fertilisers and seedlings are adding pressure to food inflation.
Sagagi also called for stronger financial oversight of security-related spending to improve efficiency in addressing insecurity.
The Monetary Policy Committee recently reduced the Monetary Policy Rate (MPR) by 50 basis points to 26.5 per cent from 27 per cent, citing improving macroeconomic indicators.
However, it retained the Cash Reserve Ratio at 45 per cent for commercial banks and 16 per cent for merchant banks, while keeping the liquidity ratio at 30 per cent.
Despite these measures, inflation remains elevated, with the National Bureau of Statistics reporting headline inflation at 15.38 per cent in March 2026, up from 15.06 per cent in February.
Sagagi’s remarks underscore concerns within the policy committee that monetary tightening alone may not be sufficient without stronger fiscal discipline and structural reforms.
