By: Tijani Salako.

Global shocks, from oil price spikes to geopolitical tensions, are testing Nigeria’s Central Bank as it tries to balance growth support with price stability.

The recent cut in the Monetary Policy Rate to 26.5 percent reflects a pro-growth stance, but external pressures could force a rethink of monetary policy plans.

Speaking at the inaugural VNL Capital Investors’ Roundtable in Lagos on Tuesday, Nnanna warned that escalating geopolitical tensions could complicate that trajectory.

He pointed to the ongoing conflict in the Middle East, particularly around Iran, as a major source of uncertainty, noting its immediate impact on oil prices, logistics and global inflation. With about 20 percent of global oil supply passing through the Strait of Hormuz, disruptions have pushed up energy and transportation costs, feeding directly into domestic price levels. “Inflation cuts across every facet of our lives,” he said, adding that Nigeria is already seeing the pass-through in rising fuel prices and broader cost-of-living pressures.

The development, he said, raises critical questions about whether the Central Bank’s easing move came too early. While policymakers had begun to pivot toward supporting growth after a prolonged tightening cycle, Nnanna said the current environment may require a more cautious stance. He expects authorities to adopt a hold-and-see approach in the near term, but warned that a return to tightening remains possible if inflation accelerates further.

For businesses and investors, the shifting policy outlook underscores the need for flexibility in an increasingly volatile environment. Nnanna warned that strategies developed at the start of the year may no longer be viable, urging firms to adapt quickly or risk falling behind. With fresh inflationary pressures expected to reflect in upcoming data, the Central Bank now faces a delicate balancing act between supporting growth and maintaining price stability.

In his welcome address, Adam Aliyu, chairman of VNL Capital Asset Management, said Nigeria continues to present opportunities despite global headwinds. “In a world of fractured alliances, constrained supply chains, and economic crosswinds, Nigeria’s growth is accelerating,” he said, adding that disciplined capital and forward-looking partnerships can deliver not just returns but lasting value.

A presentation by Ifeanyi Ubah, the firm’s Chief Investment Officer highlighted that Nigeria’s external position has strengthened compared with past oil-driven cycles, supported by reforms such as foreign exchange market unification, subsidy removal and improved reserve management. Net usable reserves have risen to about $34.8 billion, complemented by $3.5 billion in gold holdings, while the current account remains in surplus, providing a stronger buffer against external shocks than in 2022.

Despite this improved resilience, the outlook for the naira remains tied to key variables including reserve levels, money supply growth, inflation dynamics and global policy uncertainty. Scenario projections presented at the event suggest the currency could trade around N1,396.56 in a best-case outcome, N1,481.75 in a base case and weaken to N1,527.93 under a worst-case scenario, underscoring the delicate balance policymakers must manage in the months ahead.