The Central Bank of Nigeria (CBN) has intensified its liquidity management through Open Market Operations (OMO), withdrawing a total of N13.35 trillion from the financial system by August 22, 2025, up from N7.45 trillion over the same period in 2024. This represents a 79.19% year-on-year increase, reflecting a significant tightening of monetary policy.
The CBN’s actions have contributed to a decline in Nigeria’s headline inflation rate, which fell from 22.22% in June 2025 to 21.88% in July. While modest, this reduction indicates progress in the CBN’s efforts to manage inflation, although short-term inflationary pressures remain.
OMO bills have also been used to attract foreign portfolio investments, enhancing foreign exchange liquidity and supporting the stability of the naira. High yields on OMO bills have created favorable conditions for carry trades, particularly when compared with global benchmarks.
Despite the aggressive tightening, average system liquidity remained in surplus, averaging about N248.5 billion in the first half of 2025. The CBN has since adopted a more measured monetary policy stance, holding rates steady in the first half of 2025 after implementing a cumulative 875 basis points increase in the Monetary Policy Rate (MPR) in 2024.
This strategic approach is designed to balance inflation control with economic growth, maintain investor confidence, and ensure a stable financial environment.
