February 04, (THEWILL) — The Central Bank of Nigeria (CBN) intensified its tight monetary stance in January 2026, withdrawing an estimated ₦15 trillion from the financial system in one of its most aggressive liquidity-sterilisation efforts in recent years, as it moves to rein in inflationary pressures and stabilise monetary conditions.
Market data show that the apex bank relied on a combination of Open Market Operations (OMO) sales, elevated use of the Standing Deposit Facility (SDF), and primary market treasury issuances to drain excess liquidity from the banking system during the month.
OMO auctions accounted for the largest share of the withdrawal, while banks also parked substantial funds at the CBN amid tight system conditions.
Although some liquidity returned through maturing instruments, the net impact was a deep cash squeeze across the interbank market.
The tightening stance quickly fed into money-market pricing, with overnight and Open Buy Back (OBB) rates climbing sharply, at times crossing the mid-20 per cent range.
Treasury bill yields also moved higher, particularly at the short end of the curve, reflecting both liquidity scarcity and expectations that the CBN will maintain restrictive policy conditions in the near term.
The scale of the liquidity mop-up underscores the central bank’s determination to prioritise price stability and exchange-rate discipline, even at the cost of tighter financial conditions.
By constraining naira liquidity and pushing yields higher, the CBN is seeking to curb inflationary demand pressures while improving the attractiveness of naira-denominated assets to investors.
However, the sustained tightening is already raising funding costs for banks and could weigh on credit expansion to the private sector, especially for short-term and working-capital loans.
Analysts note that while the policy stance may help anchor macroeconomic stability, it presents a delicate balance between controlling inflation and supporting economic growth.
Overall, the January operations signal that the CBN is prepared to maintain a firmly restrictive posture until inflation dynamics and liquidity conditions show clearer signs of moderation, reinforcing expectations of elevated interest rates in the months ahead.
Ogochukwu Onwaeze is a writer specializing in business and economic journalism. At THEWILL News Media, she translates market trends, financial developments, and policy shifts into clear and engaging stories.
