NIGERIA’S broad money supply (M3) declined to N123.36 trillion in January 2026, down from N124.4 trillion recorded in December 2025, indicating a slight moderation in liquidity conditions at the start of the year.

The figures were disclosed in the latest monetary statistics released by the Central Bank of Nigeria (CBN), which tracks developments in money supply, banking sector liquidity, and credit conditions across the economy.

Broad money, also known as M3, represents the widest measure of money in circulation within an economy. It comprises currency outside banks, demand deposits, savings and time deposits, as well as foreign currency deposits held within the financial system.

Although the month-on-month decline suggests a marginal tightening in system liquidity, Nigeria’s money supply remains significantly higher than levels recorded a year earlier, highlighting the continued expansion of monetary aggregates over the past 12 months.

Breakdown of the data

Details from the monetary statistics show a mixed movement between domestic and external components of liquidity.

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Broad money (M3) declined to N123.36 trillion in January, compared with N124.4 trillion in December 2025, reflecting the mild contraction recorded during the period.

Similarly, narrow money (M2), which includes currency in circulation and demand deposits, also declined to N123.35 trillion from N124.4 trillion in the preceding month. This indicates a slight reduction in the most liquid forms of money available to households and businesses.

A more pronounced change occurred in net foreign assets (NFA), which dropped to N29.6 trillion from N31.5 trillion. The fall suggests a reduction in foreign currency holdings within the financial system and may reflect pressures on Nigeria’s external reserves or increased interventions in the foreign exchange (FX) market.

In contrast, net domestic assets (NDA) rose to N93.76 trillion from N92.9 trillion, pointing to continued expansion in domestic credit. This growth may be linked to increased lending to the government and private sector, as well as ongoing financing activities within the banking system.

Despite the January contraction, broad money supply remains above the roughly N111.11 trillion recorded in January 2025, reflecting sustained monetary expansion over the past year.

Monetary policy context

The movement in money supply comes amid ongoing adjustments in monetary policy by the CBN’s Monetary Policy Committee (MPC).

In September 2025, the MPC reduced the Monetary Policy Rate (MPR) by 50 basis points to 27 percent in a move aimed at stimulating economic activity as inflationary pressures began to moderate.

By November 2025, the committee opted to maintain the MPR at 27 percent, reflecting a cautious stance as policymakers sought to balance inflation control with economic growth.

More recently, at its 304th meeting in February 2026, the MPC further reduced the policy rate by 50 basis points to 26.5 percent, reinforcing a gradual easing cycle.

Other key policy parameters were left unchanged, including the Cash Reserve Ratio (CRR) at 45 percent for commercial banks and 16 percent for merchant banks, while the Liquidity Ratio remained at 30 percent. The Standing Facilities Corridor was also retained at +50/-450 basis points around the MPR.

Data from the National Bureau of Statistics (NBS) showed that headline inflation eased to 15.1 percent in January 2026, marking the 11th consecutive month of decline, a development that has strengthened the case for cautious monetary easing.

Implications for the economy

The moderation in money supply at the start of the year could signal tighter liquidity management within the banking system, which may have implications for credit availability and interest rate dynamics in the coming months.

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For businesses and consumers, a slower expansion in money supply could translate into more cautious lending by banks, potentially moderating credit growth across key sectors such as manufacturing, trade, and construction.

The decline in net foreign assets also raises concerns about the strength of Nigeria’s external buffers, particularly if it reflects continued pressure on foreign reserves or sustained interventions in the currency market. This could influence exchange rate stability and the availability of foreign currency for imports and investment.

However, the increase in net domestic assets suggests that domestic credit creation remains active, which may help sustain economic activity despite tighter external conditions.

For the Central Bank of Nigeria (CBN), the mixed trend underscores the delicate balancing act between supporting economic growth and maintaining price and exchange rate stability.

If inflation continues to moderate and domestic credit expansion remains stable, the CBN may have more room to cautiously ease monetary conditions, potentially supporting investment and consumption.

At the same time, developments in external liquidity and foreign reserves will remain critical in determining the pace and direction of future monetary policy decisions in Nigeria’s evolving macroeconomic environment.