-
The CBN says its new agreement with the Federal Government will institutionalise coordination between monetary and fiscal authorities.
-
Governor Olayemi Cardoso said the arrangement could make Nigeria’s transition to inflation targeting “significantly easier”.
-
Cardoso warned that conflicting fiscal and monetary policies could undermine economic stability.
-
The agreement is designed to strengthen information sharing and ensure policy coordination continues beyond individual officeholders.
September 23, (THEWILL) – The Central Bank of Nigeria says a new agreement with the Federal Government to institutionalise fiscal and monetary policy coordination could make the country’s planned transition to inflation targeting significantly easier.
CBN Governor Olayemi Cardoso said the memorandum of understanding would establish a more formal structure for cooperation between the monetary and fiscal authorities, reducing the risk of conflicting policies.
Cardoso spoke while responding to journalists after the 307th meeting of the Monetary Policy Committee (MPC) in Abuja on Tuesday, September 22, 2026.
The agreement comes as the CBN works towards an inflation-targeting framework, under which monetary policy decisions are increasingly anchored around achieving a defined inflation objective.
Cardoso said cooperation between the CBN and fiscal authorities was not new, pointing to existing representation of government officials on the central bank’s board and the MPC. The difference, he said, was that the latest agreement would formalise that relationship beyond the tenure of individual officials.
“I think the difference here is that we’ve decided to institutionalise this,” Cardoso said. “Individuals come, individuals go. The last thing we want is to put it down to one individual or two individuals.”
READ ALSO:
He said the arrangement would also improve information sharing between the CBN and the Ministry of Finance and provide clearer expectations about how frequently officials engage and the issues requiring joint action.
According to Cardoso, Finance Minister and Coordinating Minister of the Economy Taiwo Oyedele raised several issues for immediate consideration following the signing, while the CBN also identified its own priorities.
The CBN governor warned that weak coordination between fiscal and monetary authorities could undermine economic policy, particularly when government spending and central bank actions pull in different directions.
“The fiscal is going in one direction, the monetary is going in another. And at the end of the day, you end up in trouble,” he said.
The issue is particularly significant as Nigeria attempts to bring inflation under control while pursuing broader economic reforms. Fiscal decisions on government spending, borrowing and revenue can affect inflation and liquidity, potentially complicating monetary policy.
Cardoso said closer coordination would be particularly important to the CBN’s planned transition towards inflation targeting.
“The journey to inflation targeting, believe me, is fraught with thorns and policy missteps, if you’re unlucky,” he said, adding that the agreement would make the transition “significantly easier”.
He argued that monetary policy alone would not be sufficient to deliver an effective inflation-targeting regime, pointing to international experiences where inadequate coordination between monetary and fiscal authorities created difficulties.
Cardoso described the agreement as an attempt to ensure cooperation survives changes in personnel and becomes embedded within both institutions.
The CBN governor said the arrangement would now be tested by how effectively both sides translate the agreement into coordinated policy decisions rather than allowing it to remain merely a formal document.
Segun Adeyemi serves as the Associate Editor of THEWILL Newspaper, leveraging more than ten years of editorial expertise and a proven track record in mainstream journalism.
