Nigeria’s Broad Money Supply Dips Marginally in February 2026
Nigeria’s broad money supply (M3) recorded a marginal contraction in February 2026, slipping to ₦123.15 trillion from ₦123.36 trillion in January, according to fresh data released by the Central Bank of Nigeria (CBN).
The month-on-month decline of roughly ₦210 billion, or about 0.17 percent, marks a modest tightening in overall liquidity. Yet it hardly signals alarm: on a year-on-year basis, M3 remains robustly higher than the ₦110.71 trillion posted in February 2025, reflecting sustained expansion in the money stock over the past 12 months.
Broad money supply, or M3, serves as a comprehensive barometer of liquidity in the economy. It encompasses currency outside banks, demand deposits, savings and time deposits, as well as foreign currency holdings by residents. In essence, it measures the total pool of funds available for spending, investment, lending, and economic transactions.
A deeper dive into the components reveals a tale of rebalancing rather than outright shrinkage. Narrow money (M2), which strips out foreign currency deposits and focuses on more liquid domestic assets, mirrored the broader trend with a slight dip to ₦123.14 trillion from ₦123.35 trillion in January. This suggests a modest squeeze on immediately accessible funds for short-term economic activity.
Net foreign assets (NFA) of the banking system fell more noticeably to ₦28.41 trillion from ₦29.61 trillion, pointing to reduced external liquidity buffers—likely influenced by ongoing pressures on the naira and foreign exchange dynamics. In contrast, net domestic assets (NDA) climbed to ₦94.74 trillion from ₦93.76 trillion, buoyed by expanded domestic credit and heightened activity within the financial sector.
Analysts interpret this shift as a reorientation of liquidity sources: while external inflows or reserves faced headwinds, domestic credit creation stepped in to underpin overall monetary expansion. The net effect has been a continued year-on-year broadening of the money supply, even as authorities keep a watchful eye on excess liquidity.
This modest monthly pullback in M3 arrives against a backdrop of deliberate macroeconomic recalibration by Nigerian authorities.
For much of the past year, the CBN has pursued a tight monetary policy stance aimed at taming stubborn inflation, anchoring expectations, and defending the naira amid external shocks, including volatile oil revenues and global uncertainties.
The Monetary Policy Committee (MPC) has walked a cautious tightrope. In September 2025, it cut the Monetary Policy Rate (MPR) by 50 basis points to 27 percent—the first easing move in years—to provide some breathing room for economic activity.
The rate was held steady at that level through November 2025. By the MPC’s 304th meeting in late February 2026, another 50-basis-point reduction brought the MPR down to 26.5 percent, citing progress on disinflation and relative stability in the foreign exchange market.
Headline inflation has indeed moderated, easing to 15.06 percent in February 2026 from 15.10 percent in January and 15.15 percent in December 2025—the lowest reading since late 2020 and the 11th consecutive month of decline. Food inflation, however, showed some stickiness, underscoring that price pressures remain uneven across the basket.
The slight dip in M3 could reflect short-term liquidity management efforts—such as liquidity sterilization tools or higher cash reserve requirements—designed to prevent a resurgence in inflationary pressures while the transmission of earlier tightening continues to work through the system. It does not, however, point to a broader economic contraction.
Instead, it highlights the delicate balancing act facing policymakers: supporting growth and credit to productive sectors without unleashing excess money that could undermine hard-won gains in price and exchange rate stability.
Economists and market watchers will be closely monitoring the trajectory of M3, M2, and the NFA-NDA mix in coming months. A sustained rebalancing toward domestic credit could signal healthier internal financial intermediation, provided it is accompanied by improved lending to the real sector rather than speculative or consumption-driven activities.
For now, the February figures portray an economy where liquidity remains ample on an annual scale but is being gently reined in month-to-month.
As Governor Olayemi Cardoso and the MPC navigate the path toward single-digit inflation targets, every fluctuation in these monetary aggregates will be scrutinized for clues on whether the delicate equilibrium between growth, inflation, and currency stability can hold.
In Nigeria’s complex macroeconomic landscape, even marginal shifts in broad money supply carry weighty implications for businesses, households, and investors alike.
WHAT YOU SHOULD KNOW
Nigeria’s broad money supply (M3) saw a marginal decline to ₦123.15 trillion in February 2026, down slightly from ₦123.36 trillion in January.
Despite this modest monthly dip, liquidity remains significantly higher year-on-year compared to ₦110.71 trillion in February 2025.
This reflects a controlled rebalancing of liquidity—driven by rising domestic credit offsetting falling net foreign assets—rather than economic contraction.
Nigeria’s broad money supply (M3) recorded a marginal contraction in February 2026, slipping to ₦123.15 trillion from ₦123.36 trillion in January, according to fresh data released by the Central Bank of Nigeria (CBN).
The month-on-month decline of roughly ₦210 billion, or about 0.17 percent, marks a modest tightening in overall liquidity. Yet it hardly signals alarm: on a year-on-year basis, M3 remains robustly higher than the ₦110.71 trillion posted in February 2025, reflecting sustained expansion in the money stock over the past 12 months.
Broad money supply, or M3, serves as a comprehensive barometer of liquidity in the economy. It encompasses currency outside banks, demand deposits, savings and time deposits, as well as foreign currency holdings by residents. In essence, it measures the total pool of funds available for spending, investment, lending, and economic transactions.
A deeper dive into the components reveals a tale of rebalancing rather than outright shrinkage. Narrow money (M2), which strips out foreign currency deposits and focuses on more liquid domestic assets, mirrored the broader trend with a slight dip to ₦123.14 trillion from ₦123.35 trillion in January. This suggests a modest squeeze on immediately accessible funds for short-term economic activity.
Net foreign assets (NFA) of the banking system fell more noticeably to ₦28.41 trillion from ₦29.61 trillion, pointing to reduced external liquidity buffers—likely influenced by ongoing pressures on the naira and foreign exchange dynamics. In contrast, net domestic assets (NDA) climbed to ₦94.74 trillion from ₦93.76 trillion, buoyed by expanded domestic credit and heightened activity within the financial sector.
Analysts interpret this shift as a reorientation of liquidity sources: while external inflows or reserves faced headwinds, domestic credit creation stepped in to underpin overall monetary expansion. The net effect has been a continued year-on-year broadening of the money supply, even as authorities keep a watchful eye on excess liquidity.
This modest monthly pullback in M3 arrives against a backdrop of deliberate macroeconomic recalibration by Nigerian authorities.
For much of the past year, the CBN has pursued a tight monetary policy stance aimed at taming stubborn inflation, anchoring expectations, and defending the naira amid external shocks, including volatile oil revenues and global uncertainties.
The Monetary Policy Committee (MPC) has walked a cautious tightrope. In September 2025, it cut the Monetary Policy Rate (MPR) by 50 basis points to 27 percent—the first easing move in years—to provide some breathing room for economic activity.
The rate was held steady at that level through November 2025. By the MPC’s 304th meeting in late February 2026, another 50-basis-point reduction brought the MPR down to 26.5 percent, citing progress on disinflation and relative stability in the foreign exchange market.
Headline inflation has indeed moderated, easing to 15.06 percent in February 2026 from 15.10 percent in January and 15.15 percent in December 2025—the lowest reading since late 2020 and the 11th consecutive month of decline. Food inflation, however, showed some stickiness, underscoring that price pressures remain uneven across the basket.
The slight dip in M3 could reflect short-term liquidity management efforts—such as liquidity sterilization tools or higher cash reserve requirements—designed to prevent a resurgence in inflationary pressures while the transmission of earlier tightening continues to work through the system. It does not, however, point to a broader economic contraction.
Instead, it highlights the delicate balancing act facing policymakers: supporting growth and credit to productive sectors without unleashing excess money that could undermine hard-won gains in price and exchange rate stability.
Economists and market watchers will be closely monitoring the trajectory of M3, M2, and the NFA-NDA mix in coming months. A sustained rebalancing toward domestic credit could signal healthier internal financial intermediation, provided it is accompanied by improved lending to the real sector rather than speculative or consumption-driven activities.
For now, the February figures portray an economy where liquidity remains ample on an annual scale but is being gently reined in month-to-month.
As Governor Olayemi Cardoso and the MPC navigate the path toward single-digit inflation targets, every fluctuation in these monetary aggregates will be scrutinized for clues on whether the delicate equilibrium between growth, inflation, and currency stability can hold.
In Nigeria’s complex macroeconomic landscape, even marginal shifts in broad money supply carry weighty implications for businesses, households, and investors alike.
WHAT YOU SHOULD KNOW
Nigeria’s broad money supply (M3) saw a marginal decline to ₦123.15 trillion in February 2026, down slightly from ₦123.36 trillion in January.
Despite this modest monthly dip, liquidity remains significantly higher year-on-year compared to ₦110.71 trillion in February 2025.
This reflects a controlled rebalancing of liquidity—driven by rising domestic credit offsetting falling net foreign assets—rather than economic contraction.
