CBN Policies May Lower Inflation to 22.1% – World Bank

The World Bank has projected that Nigeria’s inflation rate could drop to an average of 22.1% in 2025, crediting this potential decline to the Central Bank of Nigeria’s (CBN) sustained tight monetary policies. This projection was highlighted in the latest Nigeria Development Update (NDU) report, titled “Building Momentum for Inclusive Growth”, launched in Abuja.

The report emphasizes that while Nigeria’s macroeconomic indicators have begun to improve, inflation remains a significant concern. The World Bank attributed the country’s high inflation to several factors, including the removal of fuel subsidies, exchange rate unification, rising logistics and energy costs, and disruptions in food supply chains.

To combat inflation, the CBN has tightened monetary policy significantly—most notably by raising the Monetary Policy Rate (MPR) to 27.5% by November 2024. These efforts are beginning to show results, with inflationary pressures appearing to ease slightly.

Economic growth has also gained traction, with Nigeria recording a year-on-year growth of 4.6% in the fourth quarter of 2024 and achieving an annual growth rate of 3.4%—the highest since 2014, excluding post-pandemic rebounds. Fiscal discipline has improved as well, with the deficit shrinking from 5.4% of GDP in 2023 to 3.0% in 2024, driven by a significant revenue increase from ₦16.8 trillion to ₦31.9 trillion.

Acting World Bank Country Director for Nigeria, Taimur Samad, noted that the current fiscal improvements offer Nigeria a historic opportunity to invest more in human capital development, social safety nets, and infrastructure.

Despite the forecasted improvements, recent data from the National Bureau of Statistics (NBS) shows that inflation remains high, rising to 24.23% in March 2025 from 23.18% in February, indicating ongoing price pressures.

The World Bank remains cautiously optimistic, stating that if the CBN maintains its current trajectory of monetary tightening, inflation could be reined in to the projected level by 2025.