Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has expressed concern over mounting inflationary risks tied to rising liquidity levels in the banking system, largely driven by increased statutory revenue disbursements through the Federation Account Allocation Committee (FAAC).
In his personal statement released after the 300th Monetary Policy Committee (MPC) meeting held on May 20, 2025, and published Saturday on the CBN’s official website, Cardoso warned that the disinflation progress achieved so far could be undermined without sustained tight monetary policy.
“We are also confronted with increased liquidity injections into the banking system from statutory revenue distributions, highlighting the need for tight monetary conditions to avoid renewed inflationary pressures,” Cardoso stated.
His comments underscore growing internal concerns within the apex bank about the volume of naira liquidity entering the economy, especially as FAAC allocations to federal, state, and local governments continue to rise.
While Nigeria has recently seen moderation in inflation trends, Cardoso emphasized that monetary vigilance is crucial to prevent a reversal, particularly as recent revenue data signals stronger government spending capacity.
The CBN has maintained a hawkish stance in recent months, raising interest rates to curb inflation. However, the latest remarks suggest that fiscal flows—rather than just consumer demand—are now a key focus in the bank’s fight against price instability.
