Nigeria: Selected Issues

This Selected Issues paper presents a descriptive analysis of recent developments in Nigeria. Recent reforms have reduced inflation persistence in Nigeria, making inflation more responsive to monetary policy actions. Exchange rate unification, improved market functioning, and a tighter monetary policy stance have collectively contributed to easing price pressures and weakening inflation inertia since mid-2023. These developments signal a structural shift in the inflation process, creating favorable conditions for monetary policy to more effectively anchor inflation expectations and maintain price stability. However, sustaining this progress will require continued macroeconomic discipline, strengthened policy credibility, and close coordination between fiscal and monetary authorities. A consistently tight and credible monetary policy, reinforced by transparent communication, will be essential to preserve recent disinflation gains and minimize the risk of renewed inflationary pressures. Over time, these reforms can support Nigeria’s transition toward a more forward-looking and effective inflation-targeting framework, enhancing monetary policy transmission and fostering greater macroeconomic stability, resilience, and sustainable economic growth.