The Governor of the Central Bank of Nigeria, Olayemi Cardoso, has raised concerns over the inflationary risks posed by rising liquidity levels in the banking system, warning that increasing statutory revenue disbursements through the Federation Account Allocation Committee could frustrate the bank’s disinflation efforts if not matched with tight monetary conditions.
Cardoso, in his personal statement released after the 300th Monetary Policy Committee meeting held on May 20, 2025, and published on the CBN’s official website on Saturday, noted that while inflation has started to moderate, emerging risks from increased liquidity injections require careful monetary vigilance.
“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,” the CBN governor said.
His remarks signal growing unease within the apex bank about the volume of naira liquidity being released into the economy, particularly as FAAC allocations to the three tiers of government rise. That concern has grown more pressing in light of recent revenue data.
