“Stability is not everything,” the German economist and former finance minister Karl Schiller once observed, “but without stability, everything is nothing.” As Nigeria navigates the complex macroeconomic waters of mid-2026, this timeless piece of economic wisdom has never been more relevant. Over the past year, the Central Bank of Nigeria (CBN) has pursued price stability with a singular, aggressive focus. Through relentless hikes in the Monetary Policy Rate (MPR) and stringent liquidity squeezes, the apex bank has finally begun to tame the runaway headline inflation that long crippled the nation’s purchasing power. Yet, as the worst of the inflationary storm begins to clear, the CBN faces an even more daunting challenge: reviving credit and steering the nation back toward sustainable economic growth.
For quarters, the CBN’s hawkish stance was a necessary bitter pill. It stabilized the naira and restored a semblance of predictability to foreign exchange markets. However, this hard-won stability has come at a steep cost to the real sector. With prime lending rates hovering at prohibitive levels, private sector credit has effectively dried up. Small and medium enterprises (SMEs)—the lifeblood of the Nigerian economy—and large manufacturers alike find themselves locked out of affordable capital. The result is a sluggish GDP growth rate that threatens to undermine the very stability the CBN worked so hard to achieve.
The central bank now stands at a critical policy crossroads. Maintaining high interest rates for too long risks tipping the economy into a deeper growth recession, exacerbating unemployment and reducing industrial output. Conversely, easing monetary policy too quickly to stimulate credit could reignite inflationary pressures and trigger capital flight, undoing months of painstaking progress. This delicate balancing act represents the ‘tougher test’ for the Monetary Policy Committee (MPC).
To navigate this transition, the CBN must look beyond blunt interest rate instruments. A more nuanced approach is required, including targeted credit facilities for high-impact sectors like agriculture, manufacturing, and technology, alongside structural reforms to de-risk lending. De-risking the real sector will encourage commercial banks to extend credit without compromising their balance sheets.
Ultimately, price stability is not an end in itself; it is the foundation upon which economic prosperity is built. Having secured the foundation, the CBN must now demonstrate the agility and strategic foresight needed to build the superstructure of credit-led growth. The coming months will reveal whether Nigeria’s monetary authorities can successfully pivot from crisis management to sustainable economic expansion.
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