The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has warned that the imposition of increased tariffs by the United States could exacerbate inflationary pressures globally, with potential spillover effects on Nigeria’s economy.
Cardoso made this statement during a press briefing on Thursday, following the conclusion of the 299th Monetary Policy Committee (MPC) meeting.
Speaking on global risks to economic stability, the CBN Governor highlighted that the US government’s new tariff measures, coupled with retaliatory actions by affected trading partners, may drive inflation higher and slow down economic growth worldwide.Cardoso noted that while the International Monetary Fund (IMF) has maintained its global growth projections at 3.3 per cent for 2025 and 2026, emerging risks such as geopolitical tensions, supply chain disruptions, and trade restrictions pose significant threats to price stability.
The Governor also referenced ongoing geopolitical conflicts, particularly in Eastern Europe and the Middle East, as additional risks that could heighten inflationary pressures through disruptions in energy supply chains and global trade.
He said, “On the global scene, the war between Russia and Ukraine as well as the uneasy calm in the Middle East remain key risks to the growth outlook. There is, however, a glimmer of hope that resolutions may be at hand.
“In addition to these legacy risks, the adoption of increased tariffs by the new US administration against its trading partners and retaliatory tariffs may result in elevated inflation and tempered growth in 2025. The IMF has, however, maintained global growth projections for 2025 and 2026 at 3.3 per cent apiece.”
Nigeria’s inflation and monetary policy response
Domestically, inflation remains a major concern for the CBN. According to the latest data from the National Bureau of Statistics (NBS), Nigeria’s inflation rate, based on the rebased Consumer Price Index (CPI), stood at 24.48 per cent in January 2025, while food inflation was recorded at 26.08 per cent. Despite a slight moderation in food prices due to government interventions, persistent inflationary pressures remain a challenge.
At the MPC meeting, the Committee resolved to retain the Monetary Policy Rate (MPR) at 27.50 per cent, as well as the Cash Reserve Ratio (CRR) of Deposit Money Banks at 50 per cent and Merchant Banks at 16 per cent. The liquidity ratio was also held at 30 per cent. These measures, Cardoso explained, are aimed at curbing inflation while ensuring financial stability.
The CBN Governor reiterated the importance of fiscal and monetary policy coordination to manage inflation expectations effectively. He emphasized the need for continued efforts in improving food supply and security to address structural factors driving food inflation.
What you should know
The Trump administration introduced tariffs on imports from China, Mexico, and Canada, a move expected to have significant implications for global trade. The tariffs, which took effect on February 4, 2025, include a 25% levy on all goods from Mexico and Canada, with a reduced 10% tariff on Canadian oil and gas exports.
Imports from China have also been hit with a 10% tariff increase. The White House justified the decision as a measure to curb illegal immigration and tackle the trafficking of fentanyl and other illicit drugs into the United States.
The policy shift has triggered a strong response from trading partners. Both Canada and Mexico have announced plans for retaliatory tariffs on U.S. goods, escalating tensions in the North American trade bloc. However, following diplomatic negotiations, Trump temporarily paused tariffs on Canada and Mexico for a month, allowing time for further discussions. The suspension came after both countries pledged to reinforce border security efforts.
These new trade measures have raised concerns among global businesses and investors. A recent Reuters survey revealed that nearly 90% of Japanese companies expect negative business impacts due to Trump’s tariff policies.
