CENTRAL BANK OF NIGERIA
MONETARY
MONETARY
POLICY REVIEW
POLICY REVIEW
MONETARY
POLICY REVIEW
AUGUST 2024
AUGUST 2024
VOLUME XIII, NUMBER 1
VOLUME XIII, NUMBER 1
AUGUST 2024
VOLUME XIII, NUMBER 1
Central Bank of Nigeria
33 Tafawa Balewa Way
Central Business District
P.M.B. 0187, Garki,
Abuja
Phone: +234 (0)9 462 36011
Website: www.cbn.gov.ng
E-mail:
ISSN: 2141-6281
©2024 Central Bank of Nigeria
iii
CBN Monetary Policy Review
CBN Monetary Policy Review
CBN Monetary Policy Review
Mandate
§Ensure Monetary and Price Stability
§Issue Legal Tender Currency in Nigeria
§Maintain External Reserves to safeguard the international
value of the Legal Tender Currency
§Promote a Sound Financial System in Nigeria
§Act as Banker and Provide Economic and Financial
Advice to the Federal Government
Vision
“To be a trusted and respected Central Bank
promoting confidence in the economy”
Mission Statement
“To ENSURE Monetary, Price and Financial System
Stability as a Catalyst for Inclusive Growth and
Sustainable Economic Development.”
Core Values
Integrity
Meritocracy
Professionalism
Accountability
Courage
Tenacity
Central Bank of Nigeria
CONTENTS
Page
iv
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Table of Contents
Statement by the Governor

vii
Chapter 1: Overview.. ..


Chapter 2: The Global Economy


2.1
Global Output ....


2.2
Global Inflation ..


2.3
Global Financial Market Developments ..
..
..
..

Chapter 3: The Domestic Economic Development
..
..
..

3.1
Output Growth


3.2
Domestic Price Developments..


3.3
Monetary Policy and Liquidity Management..
..
..

3.4
Domestic Financial Markets Developments.. ..
..
..

3.5
Monetary Policy Committee Meetings
..
..
..

Chapter 4: Economic Outlook and Risks..


4.1
Outlook for Global Output .. ..


4.2
Outlook for Global Inflation .. ..


4.3
Outlook for Domestic Output Growth ..
..
..
..

4.4
Outlook for Domestic Inflation ..


4.5
Outlook for Monetary Policy in H1 2023 ..
..
..
..

4.6 The Risks to the Outlook ..


Appendices ..


List of Tables
Table 2.1: Policy Rates of Selected Central Banks July –


December 2022


Table 2.2: Selected International Stock Market Indices as at


December 30, 2022


Table 2.3:
Sovereign Yields Spreads (Benchmark 10-Year Government


Bonds) as at December 30, 2022

..
..

Table 2.4:
Exchange Rates of Selected Countries (value in currency


units to US$)


Table 3.1.1:
Monetary Interventions in the Agriculture Sector
..

Table 3.1.2:
Monetary Interventions in Schemes under the MSME
and Industrial Policy Support ..
..
..
..

Table 3.1.3: Monetary Interventions in Schemes under Export Policy
Support


Table 3.1.4: Monetary Interventions in Schemes under Energy Policy


Support..


Table 3.1.5 Monetary Interventions in Schemes under Real Sector Policy
Support


Table 3.2: Inflation Rate ..


Table 3.2.1:
Actual and Seasonally Adjusted Headline Inflation


Jan – June 2024


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Page
Table 3.3.1: OMO Bills Auction (Jan – June 2024, N'billion)..
..

Table 3.3.2:
CBN Standing Lending Facility (January 2023 - June 2024)
(N'billion)..


Table 3.3.3:
CBN Standing Deposit Facility (Jan 2023 - June 2024)
(N'billion)


Table 3.3.4:
Foreign Exchange Supply by the CBN (US$ Million) ..

Table 3.3.4: The Performance of Monetary Aggregates
..
..

Table 3.3.4b: The Performance of Monetary Aggregates and their


Implications


Table 3.4.1: Weighted Average Monthly Money Market Interest Rates


(Jan – June 2024)


Table 3.4.2 Average & End-Period Monthly Spot Exchange Rate (N/US$),


July 2023 – June 2024 ..


Table 3.4.3
Average Nominal and Real Effective Exchange Rates Indices


(January 2023 – June 2024)


Table 3.4.4 Monthly Foreign Exchange Flows through the CBN


(Jan. 2023 – June 2024) (Billion US$)
..
..
..

Table 3.4.5 Monthly Foreign Exchange Flows through the Economy


(January 2023 – June 2024) (US$ Million)
..
..

Table 4.1 Global Output and Inflation Outlook
..
..

Table 4.2 Global Inflation Outlook ..


Table 4.4 Inflation Forecast


List of Figures
Figure 2.1:
Global Output Growth (2018 – 2025)..
..
..

Figure 2.2:
Global Inflation (2018 – 2025)..
..
..
..

Figure 3.1:
Gross Domestic Product Growth Rate (2023Q2 – 2024 Q2).. 16
Figure 3.2:
Non-oil Sector Performance (2023Q2 – 2024 Q2)..
..

Figure 3.3: Oil Sector Performance (2023Q2 – 2024 Q2) ..
..

Figure 3.4:
Sub-Components of Agricultural Sector Growth (2023Q2 –


2024 Q2)


Figure 3.5:
Industrial Sector Contribution by Activity, (2023Q2 –


2024 Q2)


Figure 3.6:
Sub-Components Services Sector Growth (2023Q2 –


2024 Q2)..


Figure 3.7:
Quarterly Domestic Oil Production and Export (2023Q2 –


2024 Q2)


Figure 3.8: Monthly Bonny Light Price, Jan 2021 - June 2024..
..

Figure 3.9:
Headline, Core and Food Inflation Rates (Jan – June 2024) 25
Figure 3.10:
Major Components of Headline Inflation (Y-on-Y) Jan –


June 2024.


Figure 3.11: Major Components of Headline Inflation (M-on-M) Jan –


June 2024


Figure 3.12:
Major Components of Food Inflation (Y-on-Y) Jan –


June 2024


Figure 3.13: Major Components of Food Inflation (M-on-M) Jan –


June 2024


Page
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Figure 3.14: Major Components of Core Inflation (Y-on-Y) Jan –


June 2024


Figure 3.15:
Major Components of Core Inflation (M-on-M) Jan –


June 2024


Figure 3.16:
Actual and Seasonally Adjusted Headline Inflation Jan –


June 2024


Figure 3.17:
Standing Lending Facility (Jan – June 2024)
..

Figure 3.18:
Standing Deposit Facility (Jan – June 2024)

..

Figure 3.19: Total FX Supply Including Forward Sales (Jan – June 2024)

Figure 3.20: Money Supply (M1), (M2) and (M3) (Jan – June 2024)..

Figure 3.21:
Growth in Money Supply (M1), (M2) and (M3) (Jan –


June 2024)


Figure 3.22: Net Domestic Assets (NDA) (Jan – June 2024)
..

Figure 3.23: NDA, NDC and Other Assets (Net) (Jan – June 2024)..

Figure 3.24: Domestic Credit to Private Sector (Jan – June 2024) ..

Figure 3.25: Structure of the Nigerian Capital Market (June 2024) ..

Figure 3.26: NGX All Share Index (ASI) and Market Capitalization (MC)


(Jan – June 2024)


Figure 3.27: NGX Market Capitalisation by Sector as at End-June 2024 40
Figure 3.28:
10-Year U.S. Dollar-denominated Bond Yield for Nigeria

(Jan – June 2024)


Figure 3:29: FGN Bond Yield Curves: December 29th, 2023, & June 28th,


Figure 3.30 Monthly Naira/US Dollar Exchange Rate January –


June 2024


Figure: 3.31 Nominal and Real Effective Exchange Rates Indices


(January 2023 – June 2024)


Figure 3.32 Monthly Foreign Exchange Flows through the CBN


(Jan. 2023 – June 2024) (US$' Billion) ..
..
..

Figure 3.33 Monthly Foreign Exchange Flows through the Economy


(January 2023 – June 2024) (US$ Billion)
..
..

Figure 4.3
Nigeria's GDP growth outlook ..
..
..
..

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STATEMENT BY THE GOVERNOR
I
n the first half of 2024, monetary policy continued to be confronted with
challenges associated with ongoing shocks from both the global and domestic
economies. In the global environment, the key risks remain the increased
geopolitical tensions which have continued to exert upward pressure on
commodity prices, resulting in slow economic recovery. In particular, the direction
of crude oil prices remains largely uncertain as the tensions in the Middle East persist
implying that energy prices may continue to fluctuate in the short to medium term.
While major central banks have commenced normalization of monetary policy,
global financial conditions have remained broadly tight as inflationary pressures
continue to abate moderately.
In the domestic economy, exchange rate pressures and price development have
been the major challenge to monetary policy. With continued demand pressure on
the exchange rate, the Bank has been focused on moderating volatility through a
willing-buyer, willing-seller framework as well as settling of verified foreign exchange
backlogs to boost market confidence. Inflationary pressure has however, continued
due to the rise in energy prices, especially the price of Premium Motor Spirit (PMS).
This is being reflected in the increased cost of transportation which is directly
transmitted to food and other commodities. Notwithstanding the downside risks,
output growth recovery was sustained in the review period. Data from the National
Bureau of Statistics (NBS) showed that real Gross Domestic Product (GDP) grew by
2.31 per cent (year-on-year) in the first quarter of 2024 and rise tepidly to 2.51 per
cent (year-on-year) in the second quarter.
In the financial market, liquidity conditions continued to influence rates in the money
market. The upward trends in money market rates during the review period reflected
the impact of tight monetary policy to curtail money supply growth and moderate
inflationary pressure. The performance of the Nigerian capital market was positive
during the review period, aptly reflecting continued investor confidence in the
economy. Consequently, the All-Share Index (ASI) increased by 33.81 per cent to
100,057.49 in June 2024, from 74,773.77 at the end of December 2023.
The conduct of monetary policy in the review period focused on anchoring inflation
expectations and moderating exchange rate pressures with an eye on stimulating
growth performance. Consequently, monetary policy assumed a hawkish stance
during the review period, with the Monetary Policy Rate (MPR) increased by a
cumulative 750 basis points to 26.25 per cent. The asymmetric corridor around the
MPR was maintained at +100/-300 basis points; Cash Reserve Ratio of Other
vii
Depository Corporations was adjusted to 45.00 per cent; while the Liquidity Ratio
was maintained at 30.00 per cent.

The outlook for the domestic economy indicates a gradual moderation of
inflationary pressure in the second half of 2024. This is predicated on the expectation
of the full impact of the sustained tight monetary policy stance of the Central Bank
of Nigeria; recent fiscal measures, such as the suspension of taxes on certain
imported goods; and improvement in policy coordination between the fiscal and
monetary authorities. However, risks to inflation remain the persisting supply-side
challenges, including lingering security issues affecting agricultural production;
continued exchange rate pressures; and rising energy costs.
While monetary policy will continue to focus on price stability, sustained
coordination between monetary and fiscal policy remains vital to achieving overall
macroeconomic stability in the short to medium term.
Olayemi Cardoso
Governor, Central Bank of Nigeria
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CHAPTER ONE

1.0
OVERVIEW
his chapter presents the summary of
the document by highlighting key
economic
and
financial
developments
that
influenced
monetary policy as well as the policy
responses by the Bank during the first half
of 2024. The developments include
global and domestic output, prices,
monetary
policy
and
liquidity
management as well as the financial
market.

On the global scene, monetary and
financial conditions remained relatively
tight even though central banks in the
advanced
economies
commenced
policy normalisation, while emerging
market central banks maintained higher
rates. This trend was driven by persistent
inflationary
pressures,
which
necessitated a cautious approach to
policy normalisation. Specifically, in the
advanced economies, major central
banks such as the US FED and the ECB
maintained relatively high policy rates
despite guidance of gradual policy
normalisation due to the slow but steady
descent of inflation. Similarly, central
banks in emerging market economies
maintained a tight policy stance due to
persistent inflationary pressure, as several
countries in the group continued to
experience rising inflation.

On
the
domestic
front,
several
developments contributed to liquidity
surfeit in the banking system and the real
economy. Notable amongst these are
the
impact
of
exchange
rate
revaluation
on
foreign
currency
balances of domestic banks, increase in
Federation
Account
Allocation
Committee (FAAC) disbursement to the
three tiers of government from the
monetised proceeds of crude oil taxes
and
royalties,
monetisation
of
Government foreign currency loans and
maturing OMO bills. These liquidity
sources contributed to inflationary and
exchange rate pressures.

Accordingly,
inflationary
pressures
persisted in the first half of 2024. This was
exacerbated
by
continued
capital
outflows as policy rates in advanced
economies remained high, resulting in
persisting exchange rate pressure with a
passthrough to domestic prices. In
addition, security challenges in food
producing areas continued to hamper
food
production
and
distribution.
Consequently, all three measures of
inflation (headline, food, and core)
trended
upwards,
reflecting
the
combined effect of various demand
and
supply-side
factors.
Headline
inflation (year-on-year) increased by
4.28 percentage points to 34.19 per cent
in June 2024 from 29.90 per cent in
January. Similarly, core inflation rose by
3.81 percentage points to 27.40 per cent
in June 2024 from 23.59 per cent in
January. Food inflation rose significantly
by 5.46 percentage points to 40.87 per
cent in June 2024 from 35.41 per cent in
January.
In
terms
of
output,
the
Nigerian
economy maintained a positive growth
trajectory in the first half of 2024. The
moderate improvement in economic
performance
was
attributable
to
enhanced
government
revenue,
improved
trade
positions
and
T


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sustainable
policies.
Growth
was,
however, subdued by inflationary and
exchange rate pressures, high-interest
rates, and persistent insecurity, all of
which
posed
challenges
to
macroeconomic stability. Data from the
National
Bureau
of
Statistics
(NBS)
showed that real GDP grew by 3.19 per
cent in the second quarter of 2024,
compared with 2.51 and 2.98 per cent in
the
corresponding
and
preceding
quarters, respectively. This was driven by
growth in both the non-oil and oil
sectors. The non-oil sector grew by 2.80
per cent in the second quarter of 2024,
compared with 3.58 and 2.80 per cent in
the
corresponding
and
preceding
quarters. The key drivers of growth in the
non-oil sector were Services (3.79%) and
Agriculture (1.41%). Accordingly, the
contribution of the non-oil sector to real
GDP was 94.33 per cent in the second
quarter of 2024, compared with 94.66
and 93.62 per cent in the corresponding
and preceding quarters, respectively.
The oil sector recorded a significant
expansion of 10.15 per cent in the
second quarter of 2024, compared with
-13.43 and 5.70 per cent in the
corresponding and preceding quarters,
respectively.

The Nigerian foreign exchange market
experienced
heightened
demand
pressures, leading to a depreciation of
the naira against the US dollar. The
market was driven by external and
domestic factors in the first half of 2024.
These include supply chain disruptions
due to ongoing geopolitical tensions
across the globe such as the RussiaUkraine war, Israel-Hamas war, and the
tension between the US and China,
amongst others. In addition, capital
reversals due to high yields on dollardenominated
assets
led
to
the
depreciation
of
EMDEs
currencies
against
the
US
dollar.
The
Bank
maintained its implementation of the
market-determined
exchange
rate
framework,
targeted
at
improving
transparency and price discovery. This
resulted in price adjustments in response
to
the
interaction
of
supply
and
demand,
reflecting
market
fundamentals. On the supply side, crude
oil receipts were significantly weak as
crude production remained below the
country’s OPEC quota throughout the
review period. On the demand side, the
activities of speculators and rent-seekers
continued to exert heightened demand
pressures. Other activities such as the
importation
of
refined
petroleum
products and general consumer goods
also
contributed
to
heightened
demand.

To sustain the implementation of the
market driven exchange rate policy, the
Bank introduced various policies such as:
the discontinuation of the cap on
Interbank FX transaction spreads to
allow for greater flexibility in pricing;
removal of restrictions on the sale of
interbank proceeds to improve market
liquidity; and sales of FX to Bureau De
Change (BDC) operators, to meet retail
market demand for eligible invisible
transactions, such as personal travel
allowances, medical expenses, and
school fees.

The
performance
of
the
Nigerian
financial
market
continued
to
be
influenced by developments in both the


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global and domestic economies, some
of which have already been highlighted.
The capital market was bullish during the
period
under
review,
reflecting
improved earnings of listed companies.
This performance was largely attributed
to increasing investor confidence and a
positive
market
outlook
as
the
recapitalisation exercise of banks kicked
off. This was also strengthened by
increasing foreign portfolio investments,
and high yield in the fixed income
market. Accordingly, the All-Share Index
(ASI) increased by 33.81 per cent to
100,057.49 at end-June 2024, from
74,773.77 at end-December 2023. On a
year-on-year basis, it increased by 64.11
per cent compared with 60,968.27 at
end-June
2023.
Similarly,
Market
capitalization (MC) increased by 38.33
per cent to N56.60 trillion at end-June

from
N40.92
trillion
at
endDecember 2023. Compared with the
corresponding
period
of
2023,
it
increased by 70.49 per cent to N56.60
trillion at end-June 2024 from N33.20
trillion at end-June 2023.

In
the
first
half
of
2024,
Federal
Government of Nigeria (FGN) securities
continued to dominate bond market
activities.
Corporate
bonds
ranked
second in market volume, while state
and municipal bonds had the least
activity during the period.

In the money market, rates trended
upwards, reflecting the impact of tight
monetary policy to curtail money supply
growth
and
moderate
inflationary
pressure. Key sources of liquidity in the
review period were statutory FAAC
disbursement;
maturing
government
securities; and exchange rate gains.
However, the Open Buy Back (OBB)
segment of the market continued to
witness
higher
trading
activities,
compared with the interbank
call
segment.

In the review period, the Bank was
focused on achieving its price stability
mandate in the light of rising inflationary
and
exchange
rate
pressures.
To
achieve this, the Bank deployed several
monetary
policy
instruments
complemented
by
macroprudential
policies. The monetary policy instruments
included the Monetary Policy Rate
(MPR),
Cash
Reserve
Ratio
(CRR),
Liquidity Ratio (LR), discount window
operations,
and
Open
Market
Operations (OMO) to manage liquidity.
The
macroprudential
policies
were
deployed
periodically
to
augment
monetary
policy
instruments
and
provide guidelines to ensure financial
system stability. Furthermore, the Bank
maintained surveillance over the foreign
exchange
market
to
promote
transparency
and
ensure
that
participants operate within the set
guidelines. The Monetary Policy Rate
(MPR) was the Bank’s key instrument for
monetary policy management in the
review period. The Bank tightened
monetary
policy
by
a
cumulative
increase of MPR by 750 basis points to
26.25 per cent from 18.75 per cent,
adjusted the asymmetric corridor to
+100/-300 basis points from +100/-700
basis points, and raised the Cash
Reserve Requirement (CRR) for Other
Depository Corporations (ODCs) and
merchant banks to 45.00 and 14.00 per


CBN Monetary Policy Review

cent from 32.50 and 10.00 per cent,
respectively, in the review period.

Open Market Operations (OMO) was
the primary
instrument
for liquidity
management.
This
was
a
marked
change from the first half of 2023, where
there were no OMO auctions. Thus, total
OMO auctions increased significantly by
594.04 per cent to ₦5,052.61 billion in the
first half of 2024 from ₦728.00 billion in the
preceding half of 2023.

In terms of outlook, domestic output
recovery is expected to be sustained in
the second half of 2024, on the basis of
improved growth prospects in the oil
sector and robust performance of the
non-oil sector. Agriculture and Services
subsectors,
particularly,
financial
&
insurance and ICT sub-sectors are
expected to be the main drivers of
output growth in the second half of 2024.
In addition, the implementation of the
petrol subsidy removal is expected to
improve oil GDP through improved
investments in oil infrastructure. This is
also expected to drive growth in the
second half of 2024. On the downside,
high cost of energy owing to the RussiaUkraine war and legacy infrastructure
challenges are expected to affect the
supply-side driver of output growth. In
addition, depressed consumer demand
arising from high inflation and the tight
monetary policy stance, as well as
increased borrowing cost is expected to
dampen ongoing recovery in output.
Informed by the foregoing, the Central
Bank of Nigeria (CBN) forecasts real GDP
to grow by 3.32 per cent in 2024. The
projection for real GDP growth was
predicated on the ongoing policy
reforms
and
improvement
in
oil
production.

Headline inflation trended upwards in
the review period, rising from 29.90 per
cent in January to 34.19 per cent in June
2024. Food inflation surged to 41.42 per
cent in June 2024 from 35.41 per cent,
while core inflation rose to 27.40 per cent
from 26.84 per cent. Estimates from the
forecast showed that inflation is likely to
decrease to 33.40 per cent in July 2024,
which is still above the upper limit of the
indicative benchmark of 6–9 per cent.
Headline
inflation
(year-on-year)
is
expected to trend upwards to 30.05 per
cent in December 2024. Although
upside risks to inflation remain due to a
combination of monetary and structural
factors,
it
is
expected
that
the
contractionary monetary policy stance
adopted will rein in inflationary pressure
in the near term. These risks include:
lingering insecurity in food producing
areas of the country causing food supply
shortages; spillover effects of subsidy
removal & the unification of the foreign
exchange market; increase in fiscal
deficits; and continued shocks from the
Russian-Ukraine war. Some attenuating
factors,
however,
include
further
tightening of monetary policy rate and
the base effect of fiscal intervention in
the agricultural sector.

Monetary
policy
formulation
and
implementation by the Bank in the
second half of 2024 would continue to
be influenced by inflation outcome with
the ultimate objective of attaining price
and financial system stability to support
inclusive growth.


CBN Monetary Policy Review

CHAPTER TWO
THE GLOBAL ECONOMY

2.1 Global Output
n the first half of 2024, output growth
across countries and regions showed
mixed performance. Key advanced
economies remained on a path of
gradual recovery while some emerging
market economies continued to face
various headwinds. The International
Monetary Fund (IMF) in its July 2024
World
Economic
Outlook
(WEO),
projected that global growth in 2024
would moderate to 3.2 per cent from 3.3
per
cent
in
2023.
The
projected
slowdown is predicated on continued
shocks to the global economy, driven
largely by incidences of geopolitical
tensions
across
regions.
This
development is expected to heighten
trade tensions and policy uncertainty
across the globe.

In the Advanced Economies, growth
was relatively subdued due to supply
chain disruptions, labour shortages, and
high inflation. Consequently, growth in
this group of economies is projected to
remain at 1.7 per cent in 2024, same as
in 2023 but inch up to 1.8 per cent in
2025. In the United States, growth is
projected to increase to 2.6 per cent in
2024, from 2.5 per cent in 2023. In the
Euro area, growth is projected to
recover from 0.5 per cent in 2023 to 0.9
per cent in 2024, driven by stronger
momentum in services and increased
net exports, leading to rising wages and
stronger
household
consumption.
Investment in this block of economies is
also expected to improve as monetary
policy easing gradually impacts on the
cost of capital. Germany, a major
economy in the block is, however,
confronted
with
shocks
to
its
manufacturing
industry
which
may
impose a drag on the zone’s broad
recovery. In the United Kingdom, some
modest recovery is expected from 0.1
per cent in 2023 to 0.7 per cent in 2024.
The Japanese economy is expected to
slow to 0.7 per cent in 2024 from 1.9 per
cent in 2023. The projected slowdown
reflects supply disruptions and weak
private consumption experienced in the
earlier part of the year.

In the Emerging Market and Developing
Economies (EMDEs), growth is expected
to moderate to 4.3 per cent in 2024 from
4.4 per cent in 2023, due to projected
slowdowns in China and India. The
Chinese
economy
is
projected
to
moderate from 5.2 per cent in 2023 to 5.0
per cent in 2024. The Indian economy is,
however, projected to slow more sharply
to 7.0 per cent in 2024 from 8.2 per cent
in 2023.

In Sub-Saharan Africa (SSA), output
growth recovery is expected to progress
moderately to 3.7 per cent in 2024 from
3.4 per cent in 2023, led by the two major
economies in the group, Nigeria and
South Africa. In Nigeria, output growth is
projected to increase to 3.1 per cent in
2024 from 2.9 per cent in 2023, largely on
account of anticipated gains from
recent economic reforms. In South
Africa, growth is estimated to improve
modestly to 0.9 per cent in 2024 from 0.7
per cent in 2023. The continued drag on
the recovery reflects the persistent
I


CBN Monetary Policy Review

legacy macroeconomic headwinds in
the power sector and labour market.

Figure 2.1:
Global Output Growth (2018 - 2025)
Source: IMF Database (2024)

2.2
GLOBAL INFLATION
Global inflation continued to moderate
gradually
towards
the
long-run
objectives of several central banks.
Consequently, global headline inflation,
is expected to ease to 5.9 per cent in
2024 from 6.8 per cent in 2023 (IMF WEO,
July 2024). Due to the slow pace of
moderation in inflation caused by
persisting high prices of services and
commodity, major central banks have
remained cautious in progressing with
monetary policy normalisation. In the
emerging
market
and
developing
economies (EMDEs), the moderation is
expected to progress at an even slower
pace. Major headwinds expected to
moderate global inflation include the
continued impact of tight monetary
policy
by
several
central
banks,
continued decline in energy prices and
a gradual softening of labour markets.
Even though the deceleration in inflation
in
the
advanced
economies
is
progressing at a slower than anticipated
pace, this group of economies is
contributing the major share to the
slowdown of global inflation. Average
inflation for the group of advanced
economies,
is
thus
expected
to
decrease to 2.7 per cent in 2024 from 4.6
per cent in 2023 (WEO July 2024) as key
central banks in this group monitor
trends and keep policy rate cuts
moderate.

In the United States, inflation is expected
to average 2.9 per cent in 2024
compared with 4.1 per cent in 2023,
driven mainly by declining core inflation
and the impact of monetary policy
tightening. In the Euro Area, inflation is
projected to average 2.4 per cent in
2024 compared with 5.4 per cent in 2023
due to declining energy prices and
easing supply chain constraints. In the
United Kingdom, inflation was forecast
to moderate to 2.5 per cent in 2024 from
7.3 per cent in 2023, on account of
sustained interest rate hikes and falling
gas & electricity prices. Inflation in Japan
was projected to average 2.2 per cent
in 2024 from 3.3 per cent in 2023, driven
by declining prices of various services
including
education
and
communication, amongst others.

In the emerging market and developing
economies, the pace of disinflation is
more gradual compared with the
advanced economies, reflecting the
complex challenges confronting this
group of economies. Countries in this
group remain confronted by exchange
rate pressures, poor power and transport
infrastructure as well as high insecurity
amongst other legacy issues. Despite

World

AEs

EMDEs

per cent
World
AEs
EMDEs
projection
Forecast


CBN Monetary Policy Review

these
challenges,
several
large
emerging market economies such as
Brazil and India, have continued to
progress with disinflation at a much
faster pace than other countries in the
group. Accordingly, inflation in the
emerging
market
and
developing
economies was projected to moderate
to 8.2 per cent in 2024 from 8.3 per cent
in 2023. In China, inflation was projected
to increase to 1.0 per cent in 2024 from
0.2 per cent in 2023 due to increased
stimulus to bolster the recovery. In India,
inflation was forecast to moderate to 4.6
per cent in 2024 from 5.4 per cent in 2023
due to a decline in energy prices and
base effect from the previous year.
Russian
inflation
was
projected
to
accelerate to 6.9 per cent in 2024 from
5.9 per cent in 2023, due to increased
demand and weakening productive
capacity.
In
Brazil,
inflation
was
projected to moderate to 4.1 per cent in
2024 from 4.6 per cent in 2023, due to
slowdown in transportation and housing
utilities.

Inflation rates in Sub-Saharan Africa
showed a mixed pattern in the first half
of 2024. Some countries managed to
contain inflation within tolerable levels,
while others faced significant upward
pressures. According to the IMF, Inflation
in this region is projected to moderate to
15.3 per cent in 2024 from 16.2 per cent
in 2023. Factors such as exchange rate
fluctuations, commodity price changes,
and local economic policies continue to
play significant roles in the dynamics of
price pressures. Countries with stable
macroeconomic
environments
and
effective monetary policies, like South
Africa, have had better control over
inflation dynamics compared with more
volatile countries in the group. Inflation in
South Africa progressed downwards
from 5.1 per cent at end-December
2023 to 5.2 per cent in May 2024. South
African inflation for 2024 is projected to
drop further to 4.9 per cent in 2024 from
5.9 per cent in 2023, though high energy
and transportation costs remain a
challenge. In Ghana, the IMF has
projected inflation to decelerate to 22.3
per cent in 2024 from 37.5 per cent in
2023, driven by a combination of fiscal
consolidation
and
exchange
rate
management by the government and
the central bank. In Nigeria, however,
inflation was estimated to rise to 26.3 per
cent in 2024 from 24.7 per cent in 2023.
The rise in inflation is expected to be
driven by continued rise in energy and
food prices as well as depreciation of
the
currency.
Food
inflation
has
remained a major concern, with prices
of staples such as rice and bread
increasing significantly.

Figure 2.2
Global Inflation (2018 - 2025)

Source: IMF Database (2024)

World

AEs


EMDEs

per cent
World
AEs
EMDEs
Forecast
Projection


CBN Monetary Policy Review

2.3
Global
Financial
Market
Developments
Global financial conditions continued
to ease through the first half of 2024 as
inflation recedes and the risk of a
financial and debt crisis diminishes.
Consequently,
with
inflation
rates
declining towards key central bank
objectives, market expectations of nearterm policy rate hikes influenced longterm
rates
and
equity
market
capitalisation. Although volumes for
Initial Public Offerings (IPOs) fell in Asia,
equity market activities in Europe and
the Americas surged in the review
period.

2.3.1 Central Bank Policy Rates
Monetary policy rates in the first half of
2024 remained high across central banks
in
the
advanced
economies
and
emerging markets due to the slow pace
of disinflation. While there was a
growing expectation of rate cuts by
most central banks in the advanced
economies
as
inflationary
pressure
moderates, those in the emerging
market
&
developing
economies,
however, continued to focus on curbing
the rising inflation.

In
the
advanced
economies,
the
European Central Bank (ECB) lowered its
policy rate by 25 basis points and
provided guidance for further rate cuts
as inflation moderates. Alternatively, the
US Federal Reserve Bank (The Fed) and
the Bank of England (BoE) held their
policy rates in the review period but also
signalled possible rate cuts in the nearterm. The Bank of Japan (BoJ), however,
raised its policy rate by 20 basis points to
address inflationary trends.

Central bank response in the Emerging
Market and Developing Economies
(EMDEs) varied reflecting their peculiar
challenges. Consequently, the Central
Bank of Egypt and the Central Bank of
Nigeria raised their policy rates by 800
and 750 basis points, respectively, in the
review period. The Peoples Bank of
China, Reserve Bank of India, Central
Bank of Russia, Reserve Bank of South
Africa, and the Bank of Ghana all held
their policy rates. The Central Bank of
Kenya and Central Bank of Brazil,
however, lowered their policy rates by
125 and 50 basis points, respectively, in
view of moderating inflationary pressure
and the need to support the recovery of
output growth.


CBN Monetary Policy Review

Table 2.1: Policy Rates of Selected Countries (December 2023 – June 2024)
Country June

July

Aug

Sept

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

June

Egypt

Kenya

S.
Africa

Ghana

Nigeria

Brazil

USA

Japan

Euro
Area

India

Russia

China

UK

Source: cbrates.com
2.3.2 Global Capital Markets
In the first half of 2024, major equity
markets showed reasonable signs of
recovery following the expectation of
monetary easing as inflationary pressure
recedes.
Consequently,
investors
diversified their portfolios moderately, to
accommodate equities, but with a
significant proportion still held in fixed
income markets.

In Africa, the Nigerian NGX All-Share,
South African JSE All-Share, Kenyan
Nairobi NSE 20, Egyptian EGX Case 30
and Ghanaian GSE All-Share indices, all
increased by 33.8, 3.7, 10.3, 12.5 and 22.3
per cent in the review period.

In North America, the United States S&P
500 and Canadian S&P/TSX Composite
indices increased by 14.9 and 4.4 per
cent, respectively, while the Mexican
Bolsa index declined by 8.6 per cent.

In South America, the Argentine Merval
and
Colombian
COLCAP
indices
increased by 73.3 and 15.5 per cent,


CBN Monetary Policy Review

respectively, while the Brazilian Bovespa
stock index decreased by 7.7 per cent.
In Europe, the UK FTSE 100 and the
German DAX indices increased by 5.6
and 8.9 per cent, respectively, in the
review period. The French CAC 40 index,
however, declined by 0.8 per cent.

In Asia, the Japanese Nikkei 225 and
Indian BSE Sensex indices increased by
18.3 and 9.4 per cent, respectively, while
the
Chinese
Shanghai
SE
index
decreased marginally by 0.3 per cent in
the period under review.


Table 2.2: Selected International Stock Market Indices as at June 24, 2024
Country
Index
29-Dec-23
30-Apr-24
28-Jun-24
Dec 29, 2023 -
Jun 28, 2024
% Change
AFRICA


Nigeria
NGX All-Share
Index

South Africa
JSE All-Share Index

Kenya
Nairobi NSE 20
Share index

Egypt
EGX CASE 30

Ghana
GSE All-Share
Index

NORTH
AMERICA


US
S&P 500

Canada
S&P/TSX
Composite

Mexico
Bolsa

SOUTH
AMERICA


Brazil
Bovespa Stock

Argentina
Merval

Columbia
COLCAP

EUROPE


UK
FTSE 100

France
CAC 40

Germany
DAX

ASIA


Japan
NIKKEI 225

China
Shanghai SE

India
BSE Sensex

Source: Bloomberg


2.3.3 Bond Market and Sovereign Yields
The performance of sovereign bond
yields
for
selected
countries
was
compared to that of the 10-year U.S.
Treasury bond. A positive yield spread
reflects
investor
perception
of
macroeconomic risk associated with a
security, while a negative yield spread,
reflects diminished perception of risk.
Therefore, the higher the yield spread,


CBN Monetary Policy Review

the higher the associated credit risk and
vice versa.

In the review period, sovereign bonds of
Ghana, Columbia, Nigeria, Brazil, and
Mexico with positive yield spreads of
1583, 641, 468, 223 and 164 basis points,
respectively, were perceived as riskier
than a US bond of similar class.
Conversely, yield spreads for Canada,
France,
Germany,
Greece,
Italy,
Portugal, Spain, UK, China, and Japan
were 85, 105, 185, 62, 28, 113, 93, 18, 215
and 331 basis points, respectively, an
indication that investors perceive a US
bond of similar class to have more credit
risk than the sovereign bonds of these
countries.

The Ghanaian and Columbian bonds
were considered the riskiest in the group
with positive yield spreads of 1583 and
641 basis points, respectively.

Table 2.3: Sovereign Yields Spreads (Benchmark 10-Year Government Bonds) on June 28, 2024
Country
April 30, 2024
Yield (%)
June 28, 2024
Yield (%)
Change in
Yield (Basis
Points)
June 28, 2024 Spread over
the U.S. (Basis points)
AFRICA
Nigeria (U.S. $)
8.93
9.03

Ghana (U.S. $)

NORTH AMERICA
Canada

Mexico
6.16
5.99
-17

US
4.68
4.35
-33

SOUTH AMERICA
Brazil
6.69
6.58
-11

Columbia
10.56
10.76

EUROPE
France
3.05
3.29

-105
Germany

Greece
3.56
3.73

-62
Italy
3.91
4.07

-28
Portugal
3.19
3.22

-113
Spain
3.35
3.42

-93
UK

ASIA
China

Japan
0.87
1.04

-331
Source: Bloomberg

2.3.4 Global Commodity Prices
Most price indices surveyed in the
review period showed an uptrend due
to
continued
geopolitical
tensions
across the globe. The unabating standoff between Russia and Ukraine has
continued to put upward pressure on
food prices due to supply bottlenecks.
The war between Israel and Palestine


CBN Monetary Policy Review

and the tensions between US and China,
have also led to the polarization of
global powers, resulting in continued
supply chain disruptions.

The IMF primary commodity price index
increased to 166.8 points at end-June
2024 from 159.5 points at end-December
2023. This was driven by increases in the
price sub-indices of non-fuels, edibles,
agricultural raw materials, energy and
petroleum to 153.5, 136.5, 209.7, 102.0,
186.0, and 200.6 points at end June 2024
from 148.7, 134.3, 139.5, 100.9, 175.2, and
182.5 points at end-December 2023,
respectively.

The Food and Agriculture Organization
(FAO) Food Price Index also rose to 121.0
points at end-June 2024 from 119.2
points at end-December 2023. The subindices of meat, diary, and vegetable
oils rose to 118.0, 127.9, and 131.8 points
at end-June 2024, from 111.7, 118.7, and
122.3
points
in
December
2023,
respectively. On the other hand, the
sub-indices of cereals and sugar fell to
115.2 and 119.4 points at end-June 2024
from 122.8 and 134.2 points at endDecember 2023, respectively.

The performance of the oil sector,
however,
improved
reflecting
the
rebound in global economic activities.
As a result, the average price of the
OPEC Reference Basket increased to
US$83.22 per barrel at end-June 2024
from US$79.00 per barrel at endDecember 2023.


2.3.5 Global Foreign Exchange Market
In the first half of 2024, most currencies
depreciated against the US dollar. This
was driven primarily by the strengthening
US economy which led to inflow of
capital into US dollar denominated
assets. The continued high level of
inflation in major emerging market and
developing economies, also fuelled
capital outflows from these economies,
leading to further depreciation of their
exchange rates.

In
Africa,
the
Nigerian
naira,
depreciated significantly against the US
dollar by 63.43 per cent in the first half of
2024. Compared with the corresponding
period (first half of 2023), it depreciated
by 90.78 per cent. The South African
Rand, and the Kenyan Shilling, however,
appreciated by 0.60 and 17.45 per cent
respectively, while the Egyptian pound
and Ghanian cedi depreciated against
the US Dollar by 55.39 and 27.78 per
cent, respectively.

In North America, the Canadian Dollar
and the Mexican Peso depreciated by
3.01 and 7.96 per cent, respectively.
In South America, the Brazilian real,
Argentine peso and Colombian peso
depreciated against the US dollar by
15.26,
12.73
and
6.94
per
cent,
respectively.

In Europe, the Russian Ruble maintained
a strong performance against the US
dollar, appreciating by 4.46 per cent in
the review period. The pound sterling
was stable on average, while the Euro
depreciated by 2.20 per cent.


CBN Monetary Policy Review

In Asia, the Japanese Yen, Chinese
yuan, and Indian rupee all depreciated
against the US dollar by 14.08, 2.39 and
0.20 per cent, respectively.


Table 2.4: Exchange Rates of Selected Countries (value in currency units to US$)


CBN Monetary Policy Review

CHAPTER THREE
DOMESTIC ECONOMIC DEVELOPMENTS

3.1 Output Growth
he Nigerian economy maintained a
positive growth trajectory in the first
half
of
2024.
The
moderate
improvement in economic performance
was
attributable
to
enhanced
government revenue, improved trade
positions
and
sustainable
policies.
Growth was, however, subdued by
ongoing inflationary & exchange rate
pressures,
high-interest
rates,
and
persistent insecurity, all of which posed
challenges to macroeconomic stability.
Data from the National Bureau of
Statistics (NBS) showed that real GDP
grew by 2.98 per cent (year-on-year) in
the first quarter of 2024 compared with
2.31
and
3.46
per
cent
in
the
corresponding and preceding quarters,
respectively. This was driven mainly by
the non-oil sector which grew by 2.80 per
cent in the first quarter of 2024,
compared with 2.77 and 3.07 per cent in
the
corresponding
and
preceding
quarters, respectively. The service sector
which grew by 2.47 per cent was the key
driver of growth in the non-oil sector.
Despite this improved performance, the
contribution of the non-oil sector to the
overall GDP moderated to 93.62 per
cent in Q1 2024 from 93.79 and 95.30 per
cent
in
the
corresponding
and
preceding quarters, respectively.

In the first quarter of 2024, the oil sector
expanded for the second consecutive
quarter by 5.70 per cent, compared with
a contraction of 4.21 per cent in the
corresponding quarter and expansion of
12.11 per cent in the preceding quarter.
Key factors that supported growth
during
the
review
period
include
improved production which averaged
1.57 million barrels per day (mbpd) in Q1
2024, from 1.55 mbpd in the preceding
quarter. This was as a result of the
evacuation in Bonny, Forcados, and
Tulja-Okwuibome terminals, supported
by increased oil well drillings. Despite the
improved performance, production in
the sector was limited by continued
incidences of oil theft and vandalism as
well
as
divestments
by
some
international oil companies (IOCs).

In the second quarter of 2024, real GDP
grew by 3.19 per cent compared with
2.51
and
2.98
per
cent
in
the
corresponding and preceding quarters,
respectively. This was driven by growth in
both the non-oil and oil sectors. The nonoil sector grew by 2.80 per cent in the
second quarter of 2024, compared with
3.58
and
2.80
per
cent
in
the
corresponding and preceding quarters.
The key drivers of growth in the non-oil
sector
were
Services
(3.79%)
and
Agriculture (1.41%). Accordingly, the
contribution of the non-oil sector to real
GDP was 94.33 per cent in the second
quarter of 2024 compared with 94.66
and 93.62 per cent in the corresponding
and preceding quarters, respectively.
The oil sector, however, recorded a
significant expansion of 10.15 per cent in
the second quarter of 2024, compared
to -13.43 and 5.70 per cent in the
corresponding and preceding quarters,
respectively.

Key factors that constrained growth in
the review period included the high
T


CBN Monetary Policy Review

price and perennial scarcity of PMS, high
cost of other energy sources, continued
exchange rate pressure, and lingering
insecurity. The combined impact of
these factors exerted upward pressure
on inflation and depressed production.

Despite these challenges, the Federal
Government's
reforms
and
policy
initiatives as well as fiscal interventions
helped
to
sustain
the
growth
momentum.

Figure 3.1: Gross Domestic Product Growth Rate
(2022Q1 – 2024Q2)

Source: National Bureau of Statistics (NBS)

3.1.1 DOMESTIC ECONOMIC ACTIVITIES
In the first half of 2024, real GDP was
driven by activities in both the non-oil
and oil sectors. The non-oil sector grew
by 2.80 per cent in the first quarter of
2024, compared with 2.77 and 3.07 per
cent
in
the
corresponding
and
preceding quarters, respectively. The
sub-sectors that drove non-oil growth
include Finance & insurance (31.24%);
ICT (5.43%); crop production (1.71%),
manufacturing
(1.49%)
and
trade
(1.23%), compared with their respective
growth rates of 21.37, 10.32, 1.93, 1.61
and 1.31 per cent in the corresponding
period and 29.78, 6.33, 2.44, 1.38 and
1.40 per cent in the preceding quarter.

In the oil sector, output expanded by
5.70 per cent in the first quarter of 2024
compared with -4.21 and 12.11 per cent
in the corresponding and preceding
quarters, respectively. Average daily oil
production rose to 1.33 million barrels per
day (mbpd) in the first quarter of 2024,
compared with 1.31 mbpd in the
preceding quarter. This increase resulted
from higher production of crude oil and
condensate, and ongoing efforts by the
government to address oil theft and
vandalism. Crude oil drilling activities
also improved considerably as indicated
by the increase in rig count to 17 in Q1
2024 from 14 in Q4 2023 (OPEC). Crude
oil production levels, however, remained
below the OPEC Production quota of
1.58 mbpd due to legacy issues such as
oil theft, dilapidated infrastructure, and
low investments in the sector.

In the second quarter of 2024, growth in
the non-oil sector moderated to 2.80 per
cent from 3.58 and 2.80 per cent in the
corresponding and preceding quarters,
respectively.
The
sub-sectors
which
drove non-oil growth were financial and
insurance
(28.79%);
water
supply,
sewage & waste management (8.20%);
Mining and Quarrying (7.79%); electricity
& other utilities (5.96%); information and
communication (4.44%) and Forestry
(2.77%). These compared with their
respective growth rates of 26.84; 5.57; -
3.96; 9.53; 8.6 and 1.88 per cent in the
corresponding quarter and 31.24; 6.95;
6.30; -5.43; 5.43; and 2.73 per cent in the
preceding quarter, respectively.


Non-Oil GDP (Y-o-Y-RHS)
Oil GDP(Y-o-Y-LHS)
Real GDP (RHS)


CBN Monetary Policy Review

The oil sector, however, recorded a
strong growth of 10.15 per cent in the
second quarter of 2024, compared with
-13.43 and 5.70 per cent in the
corresponding and preceding quarters,
respectively.
Average
daily
oil
production improved to 1.27 mbpd in
the second quarter of 2024 from 1.22
mbpd in the second quarter of 2023 but
was below 1.33 mbpd in the preceding
quarter. The performance of oil output
was below the budgetary benchmark of
1.78 mbpd due to ongoing legacy issues
such as persistent oil theft and pipeline
vandalism, amongst others.

Figure 3.2: Performance of Non-oil Sector (2022Q1
– 2024Q2)

Source: NBS

Figure 3.3: Performance of oil Sector (2022Q1 –
2024Q2)

Source: NBS

3.1.2 Sectoral Analysis
This section analyses the key drivers of
sectoral growth in the review period.

3.1.2.1 Agriculture
In the first quarter of 2024, agricultural
output
grew
by
0.18
per
cent,
compared with -0.90 and 2.10 per cent
in the corresponding and preceding
quarters, respectively. This was driven
largely by forestry which grew by 2.73
per cent in the first quarter of 2024, from
1.24
and
1.69
per
cent
in
the
corresponding and preceding quarters,
respectively. The contribution to growth
in agriculture was followed by crop
production which grew by 1.71 per cent,
though lower than 1.93 and 2.44 per
cent
in
the
corresponding
and
preceding
quarters,
respectively.
Livestock
and
fishing,
however,
maintained contractions of 23.29 and
1.44 per cent in Q1 2024, compared with
-30.57 and -2.92 per cent in the
corresponding period, and -2.09 and -
0.12 per cent in the preceding quarter,
respectively. The share of agriculture in
overall GDP declined to 21.07 per cent
in the first quarter of 2024 from 21.66 and
26.11 per cent in corresponding and
preceding quarters, respectively.

In the second quarter of 2024, the
agricultural sector grew by 1.41 per cent,
compared with 1.50 and 0.18 per cent in
the
corresponding
and
preceding
quarters, respectively. This performance
was driven largely by forestry, which
grew by 2.77 per cent compared with
1.24
and
2.73
per
cent
in
the

Agriculture
Industry
Services


CBN Monetary Policy Review

corresponding and preceding quarters,
respectively. The share of agriculture in
overall GDP stood at 22.61 per cent in
the second quarter of 2024 compared
with 23.01 and 21.07 per cent in the
corresponding and preceding quarters,
respectively.

Figure 3.4: Sub-Components of Agricultural Sector
Growth (2023Q2 – 2024Q2)
Source: NBS
3.1.2.1.1Agricultural
Policies
and
Institutional Support1
In the review period, the Bank sustained
the winding down of its interventions in
the
agriculture
sector
with
total
disbursements declining significantly by
554 per cent to ₦3.77 billion from ₦24.66
billion. A total of 11,082 loans valued at
₦3.77 billion were guaranteed under the
Agricultural Credit Guarantee Scheme
in the first half of 2024, compared with
24,667 loans valued at ₦5.39 billion in the
preceding period. A total of ₦3.62 billion
was repaid under the scheme during the
period, compared with ₦3.87 billion at
end-June 2024. Total recoveries in the
review period decreased to ₦131.45
billion from ₦238.70 billion.

Details of the intervention schemes
under the Agricultural Policy Support are
provided in table 3.1.1.
Table 3.1.1: Monetary Interventions in the Agriculture Sector


July – December 2023
January – June 2024
S/N
Intervention
Disbursement
Beneficiaries
/Projects
Repayment
(₦' Billion)
Disbursement
Beneficiaries
/Projects
Repayment
(₦' Billion)
(₦' Billion)
(₦' Billion)

Agricultural Credit
Guarantee
Scheme (ACGS)
₦5.39
24,667 Loans
Guaranteed
₦3.62
₦3.77
11,082 Loans
Guaranteed
₦3.87

Commercial
Agricultural Credit
Scheme (CACS)
₦11.01
1 Project
₦20.20
Nil
Nil
₦20.81

Anchor Borrowers'
Programme (ABP)
₦8.26
111,111
farmers
₦198.78
Nil
Nil
₦101.71

Accelerated
Agriculture
Development
Scheme (AADS)
Nil
Nil
₦2.58
Nil
Nil
₦1.75

Maize
Aggregation
Scheme (MAS)
Nil
Nil
₦0.12
Nil
Nil
₦0.23

Paddy
Aggregation
Scheme (PAS)
Nil
Nil
₦2.70
Nil
Nil
-

1 Note that H1 2024 figures contained in this report
are provisional.

2023-Q2
2023-Q3
2023-Q4
2024-Q1
2024-Q2

Crop Production
Livestock
Forestry
Fishing


CBN Monetary Policy Review

Presidential
Fertilizer Initiative
(PFI)
Nil
Nil
₦5.39
Nil
Nil
₦1.00

National Food
Security
Programme (NFSP)
Nil
Nil
₦5.01
Nil
Nil
₦1.98

Private –
Accelerated
Agricultural
Development
Scheme (P-AADS)
Nil
Nil
₦0.30
Nil
Nil
₦0.10

TOTAL
₦24.66

₦238.70
₦3.77

₦131.45
Source: CBN, Development Finance Department


3.1.2.2 Industry
The industry sector grew by 2.19 per
cent in Q1 2024, compared with 0.46
and 3.86 per cent in the corresponding
and preceding quarters, respectively.
The sectoral performance was driven
largely by mining & quarrying and
manufacturing which grew by 6.30 and
1.49 per cent in the first quarter of 2024,
compared with -3.96 and 1.61 per cent
in the corresponding period, and 8.04
and 1.38 per cent in the preceding
quarter, respectively. Growth in the
sector was, however, moderated by the
contraction of 0.43 per cent in the
construction sub-sector. The share of the
industry sector in real GDP stood at 20.89
per cent compared with 21.05 and 17.34
per cent in the corresponding and
preceding quarters, respectively.

In the second quarter of 2024, the
industry sector grew considerably by
3.53 per cent, compared with 0.31 and
2.19 per cent in the corresponding and
preceding quarters, respectively. The
key drivers of growth included mining &
quarrying; electricity & gas; and water
supply, which grew by 7.79; 5.96 and
8.20 per cent compared with -12.96;
6.10; and
20.56
per cent
in the
corresponding quarter and 6.30; -5.43;
and 6.95 per cent in the preceding
quarter, respectively. The share of
industry in overall GDP stood at 18.62 per
cent compared with 18.56 and 20.89 per
cent
in
the
corresponding
and
preceding quarters, respectively.

Figure 3.5: Sub-Components of Industry Sector
Growth (2023Q2-2024Q2)

Source: NBS

3.1.2.2.1Industry Policies and Institutional
Support
In
the
review
period,
the
Bank
commenced the winding down of its
intervention in the industry sector. While
there were no disbursements in the
review
period,
total
recoveries
increased to ₦8.63 billion from ₦2.83
billion. Schemes under the MSME and
Industrial Policy Support are provided in
Table 3.1.2.
2023-Q2
2023-Q3
2023-Q4
2024-Q1
2024-Q2

MINING AND QUARRYING
MANUFACTURING


CBN Monetary Policy Review

Table 3.1.2: Monetary Interventions in Schemes under the MSME and Industrial Policy Support


July – December 2023
January – June 2024
S/N
Intervention
Disbursement
Beneficiaries
/Projects
Repayment
(₦' Billion)
Disbursement
Beneficiaries
/Projects
Repayment
(₦' Billion)
(₦' Billion)
(₦' Billion)

Micro, Small and
Medium Enterprises
Development Fund
(MSMEDF)
Nil
Nil
₦1.24
Nil
Nil
₦1.30

Agribusiness/Small
and Medium
Enterprises
Investment Scheme
(AGSMEIS)
Nil
Nil
₦0.82
Nil
Nil
₦2.50

Creative Industry
Financing Initiative
(CIFI)
Nil
Nil
₦0.44
Nil
Nil
₦0.29

Targeted Credit
Facility (TCF)
Nil
Nil
₦0.30
Nil
Nil
₦4.50

Nigeria Youth
Investment Fund
(NYIF)
Nil
Nil
0.00
Nil
Nil
₦0.04

Tertiary Institution
Entrepreneurship
Scheme (TIES)
Nil
Nil
₦0.03
Nil
Nil
-

Youth
Entrepreneurship
Development
Programme (YEDP)
Nil
Nil
0.00
Nil
Nil
-

TOTAL


₦2.83


₦8.63
Source: CBN, Development Finance Department

3.1.2.1.1 Export Policies2
The Bank continued its emphasis on
recovering outstanding loans on the
Export policy support programmes while
there were no disbursements. Total
recoveries
in
the
review
period
increased by 144.3 per cent to ₦26.58
billion from ₦10.88 billion. Details of the

intervention schemes under the Export
Policy Support are provided in table
3.1.3.


CBN Monetary Policy Review

Table 3.1.3: Monetary Interventions in Schemes under Export Policy Support

Source: CBN, Development Finance Department

3.1.2.1.1 Energy Policy Supporti
In
the
review
period,
the
Bank
honoured pre-approved disbursements
to this programme totalling ₦15.58 billion
compared with ₦1.65 billion in the
previous
period.

Recoveries
of
outstandings under this programme,
however, rose to ₦31.28 billion from
₦19.88 billion in the previous period.
Details of the intervention schemes
under the Energy Policy Support are
provided in table 3.1.4

Table 3.1.4: Monetary Interventions in Schemes under Energy Policy Support

Source: CBN, Development Finance Department


CBN Monetary Policy Review

3.1.2.1.1 Real Sector Policy Support3
Under the Real Sector Policy Support
programme, total recoveries in the
review period stood at ₦149.90 billion
from
₦191.35
billion
while
total
disbursements increased to ₦202.05
billion from ₦197.78 billion as provided in
Table 3.1.5.

Table 3.1.5: Monetary Interventions in Schemes under Real Sector Policy Support

Source: CBN, Development Finance Department

3.1.3.1 Services Sector
In the first quarter of 2024, the services
sector grew by 4.32 per cent compared
with 4.35 and 3.98 per cent in the
corresponding and preceding quarters,
respectively. Growth in the sector was
driven mainly by Financial & insurance
(31.24%); Information & Communication
(5.43%);
Arts,
Entertainment
and
Recreation (4.44%); and Transportation
& Storage (3.33%). This compares with
21.37, 10.32, 5.47, 9.36 and 1.31 per cent
in the corresponding quarter and 29.78,
6.33, and 4.13 per cent in the preceding
period,
respectively.
The
share
of
services in real GDP increased to 58.04
per cent in the first quarter of 2024
compared with 57.29 and 56.55 per cent

in the corresponding and preceding
quarters, respectively.

Growth in the Services sector in the
second quarter of 2024 moderated to
3.79 per cent from 4.42 and 4.32 per cent
in the corresponding and preceding
quarters, respectively. The moderation
was driven mainly by transportation and
storage which contracted by 13.53 per
cent compared with -50.64 and 5.58 per
cent
in
the
corresponding
and
preceding, quarters, respectively. The
contraction
in
the
sub-sector
was
attributed to perennial PMS supply
shortages and high prices of petroleum
products during the review period.
Despite the moderation, the share of
services in overall GDP rose slightly to


CBN Monetary Policy Review

58.76 per cent from 58.42 and 58.04 per
cent
in
the
corresponding
and
preceding periods, respectively.

Figure 3.6: Sub-Components of Services Sector
Growth (2023 Q2-2024 Q2)

Source: NBS

3.1.4.1 Oil Sector
In the first half of 2024, the oil sector
continued to be confronted with legacy
issues such as pipeline vandalism, crude
oil
theft,
aging
infrastructure,
and
divestment from the sector.

Domestic oil production in the first
quarter of 2024, however, rose to 1.33
mbpd compared with 1.30 mbpd and
1.31mbpd in the corresponding and
preceding quarters, respectively. The
increase resulted from ongoing efforts by
the government to address some of
these legacy factors. In the second
quarter of 2024, domestic oil production
stayed below the 2024 budgetary
production benchmark of 1.78 mbpd at
1.27 mbpd. This compares with 1.15
mbpd in the corresponding quarter and
1.33 mbpd in the preceding quarter.

During the review period, international
oil prices improved due to the impact of
the hurricane season and lower crude oil
inventories in the US. Accordingly, the
price of Nigeria’s reference crude, the
Bonny Light 370API, rose to US$88.86 per
barrel (pb) at end-June 2024 from
US$76.22 per barrel at end-June 2023
and
US$78.19
per
barrel
at
endDecember 2023.

Figure 3.7: Quarterly Domestic Oil Production
(2022Q2-2024Q2)

Source: NBS

Figure 3.8: Quarterly Bonny Light Oil Price, March
2023 - August 2024

Source: NBS


2023-Q2
2023-Q3
2023-Q4
2024-Q1
2024-Q2
-
-
-
HUMAN HEALTH AND SOCIAL SERVICES
EDUCATION
PUBLIC ADMINISTRATION
ADMINISTRATIVE & SUPPORT SERVICES
PROFESSIONAL, SCIENTIFIC AND TECHNICAL SERVICES
REAL ESTATE
FINANCIAL AND INSURANCE
ARTS, ENTERTAINMENT AND RECREATION
INFORMATION AND COMMUNICATION
TRANSPORTATION AND STORAGE

Mar
Jun
Sept
2023 Dec
2024 Mar
2024 Jun

Bonny Light


CBN Monetary Policy Review

3.2 Domestic Price Developments
In the first half of 2024, inflationary
pressures persisted, driven largely by
rising food and energy prices. This was
exacerbated
by
continued
capital
outflows as policy rates in advanced
economies remained high, resulting in
persisting exchange rate pressure with a
passthrough to domestic prices. In
addition, security challenges in food
producing areas continued to hamper
food
production
and
supply.
Consequently, all three measures of
inflation (headline, food, and core)
trended
upwards,
reflecting
the
combined effect of various demand
and supply-side factors.
On
the
demand
side,
price
development was largely impacted by
the increase in the level of liquidity in the
economy driven by the significant
depreciation of the currency, maturity of
tenored securities; and increase in FAAC
disbursements. These contributed to
increased aggregate demand, with
resultant upward pressure on prices.
On
the
supply-side,
the
persistent
insecurity
in
farming
communities,
unfavourable
weather
conditions
associated with climate change, rising
energy
costs,
and
inadequate
infrastructure,
all
contributed
to
a
general increase in food and overall
price levels.

3.2.1 Trends in Inflation
Headline, core, and food measures of
inflation maintained upward trajectories
during
the
period
under
review.
Headline
inflation
(year-on-year)
increased by 4.28 percentage points to
34.19 per cent in June 2024 from 29.90
per cent in January. Similarly, core
inflation rose by 3.81 percentage points
to 27.40 per cent in June 2024 from 23.59
per cent in January. Food inflation rose
significantly by 5.46 percentage points
to 40.87 per cent in June 2024 from 35.41
per cent in January (Table 3.3 and Figure
3.1).

Figure 3.9: Headline, Core, and Food Inflation
Rates (Jan – June 2024)

Source: NBS


Mar-22
May-22
Jul-22
Sep-22
Nov-22
Jan-23
Mar-23
May-23
Jul-23
Sep-23
Nov-23
Jan-24
Mar-24
May-24
Headline (Y-o-Y)
Food (Y-o-Y
Core (Y-o-Y)


CBN Monetary Policy Review

Table 3.2: Inflation Rate (Jan – Jun 2024)
Month
Headline
Core
Food

CPI
YoY
12MMA
CPI
YoY
12MMA
CPI
YoY
12MMA
January

February

March

April

May

June

Source: NBS

3.2.1.1 Headline Inflation
Headline inflation increased to 34.19
per cent in June 2024 from 29.90 per
cent in January, driven largely by Food
&
Non-Alcoholic
Beverages,
which
increased to 25.05 per cent in June 2024
from 21.42 per cent in January. Housing,
Water, Electricity, Gas, & Other Fuels also
increased to 4.15 per cent in June 2024
from 3.46 per cent in January. Other
components such as Restaurants &
Hotels, and Alcoholic Beverages &
Tobacco increased to 0.23 per cent
from 0.19 per cent and 0.18 per cent
from 0.14 per cent, respectively (Table
3.2 and Figure 3.2). The prices of other
components
such
as
Furnishings,
Household Equipment & Household
Maintenance increased mildly during
the period.


Figure 3.10: Major Components of Headline
Inflation (Y-on-Y), Jan – Jun 2024

Source: NBS

On a month-on-month basis, headline
inflation decreased to 2.31 per cent in
June 2024 from 2.64 per cent in January.
The major driver of the decline in monthon-month headline inflation were the
prices
of
food
and
non-alcoholic
beverages, which moderated to 1.64
per cent in June 2024 from 2.01 per cent
in
January.
There
were
also
mild
decreases in the prices of health services
(Table 3.3 and Figure 3.3). The decrease

Food & Non Alcoholic Bev.
Alcoholic Beverage. Tobacco and Kola
Clothing and Footwear
Housing Water, Electricity. Gas and Other Fuel
Furnishings & Household Equipment Maintenance.
Health.
Transport
Communication
Recreation & Culture.
Education
Restaurant & Hotels
Miscellaneous Goods & Services
headline


CBN Monetary Policy Review

in month-on-month inflation is largely
due to seasonal factors.
Figure 3.11: Major Components of Headline
Inflation (M-on-M), Jan – Jun 2024

Source: NBS

3.2.1.2 Food Inflation
Food inflation (year-on-year) rose to
41.42 per cent in June 2024 from 35.41
per cent in January, driven mainly by
processed food, which increased by
1.43 percentage points to 21.84 per cent
in June 2024 from 20.41 per cent in
January. The uptick in the price of
processed food resulted from increases
in fish & seafood; meat; oil & fats;
unsliced bread; eko (agidi/kafa); and
yam flour (sold loose). Similarly, the price
of
farm
produce
rose
by
4.57
percentage points (ppts) to 19.58 per
cent in June 2024 from 15.01 per cent in
January. The increase in the prices of
yam, potatoes, & other tubers (1.02
ppts); maize grain, white sold loose (0.87
ppt); millet, sold loose (0.35 ppt); rice
agric (1.03 ppts); rice local (0.42 ppt);
and sorghum, white or brown, sold loose
(0.71ppt) accounted for the rise in the
price of farm produce. In general, the
increase in food price was attributed
largely to food shortages caused by
security challenges, especially in the
food producing areas, and the hike in
transport costs.

Figure 3.12: Major Components of Food Inflation
(Y-on-Y), Jan – June 2024

Source: NBS


Figure 3.13: Major Components of Food Inflation
(M-o-M), Jan – Jun 2024

Source: NBS
3.2.1.3 Core Inflation
Core inflation (year-on-year) rose to
27.40 per cent in June 2024, an increase
of 3.81 percentage points from 23.59 per
cent in January 2024. The increase was
driven by Processed Food (1.84%);
Transport
(0.82%);
Housing,
Water,
Electricity, Gas & Other Fuel (0.70%);
Furnishings, Household Equipment &
Household Maintenance (0.14%); Health
(0.31%); Restaurant & Hotels (0.20%);
Non-Alcoholic Beverages (0.16%); and

Communication
Recreation &
culture
Alcoholic Bev.
Tobacco & Kola
Restaurant &
Hotels
Miscellaneous
Goods & Services
Health
Education
Furnishings,
Household Equip
&HH Maint.
Transport
Clothing &
footwear
Housing,Water,
Elect.Gas & Other
Fuel
Food & NonAlcoholic Bev.

FOOD
Processed Food
Meat
Fish & Sea Food
Oil & Fats
Bread Unsliced
500g
Jan-24 Feb-24 Mar-24 Apr-24 May-24 Jun-24

FOOD
Processed
Food
Meat
Fish & Sea
Food
BREAD
UNSLICED
500g
EKO(AGIDI/
KAFA)


CBN Monetary Policy Review

Alcoholic Bev. Tobacco & Kola (0.08%).
(Table
3.6
and
Figure
3.8).
Food
shortages emanating from insecurity in
food-producing areas, and perennial
scarcity as well as increase in price of
PMS were the key drivers of the rise in
core inflation.

Figure 3.14: Major Components of Core Inflation
(Y-on-Y) January – June 2024

Source: NBS

On
a
month-on-month
basis,
core
inflation, however, decreased by 0.18
percentage point to 2.06 per cent in June
2024 from 2.24 per cent in January 2024.
The moderation was driven by Processed
Food (-0.16 ppt); Health (-0.05ppt); and
Education (0.01ppt). (Figure 3.15).

Figure 3.15: Major Components of Core Inflation
(M-on-M) January – June 2024

Source: NBS
3.2.2
Seasonally Adjusted Inflation
The seasonally adjusted measure of
headline
inflation
maintained
an
upward trajectory between January
and June 2024 (Table 3.8 and Figure
3.10). Actual headline inflation trended
above the seasonally adjusted measure
and continued to reflect the rise in
general price level in the economy. The
overall uptrend in both the actual and
seasonally adjusted measures reflected
the continuous depreciation of the
naira, rising energy prices and supply
chain disruptions.

Table 3.2.1: Actual and Seasonally Adjusted
Headline Inflation (January – June 2024)
Month
Inflation
SA Inflation
Jan-24
29.90
25.35
Feb-24
31.70
26.18
Mar-24
33.20
27.13
Apr-24
33.69
28.10
May-24
33.95
29.06
Jun-24
34.19
30.00
Source: NBS

Figure 3.16: Actual and Seasonally Adjusted
Headline Inflation (January – June 2024)

Source: NBS and CBN
Jan-24
Feb-24
Mar-24
Apr-24
May-24
Jun-24

Communication
Recreation & culture
Alcoholic Bev. Tobacco & Kola
Non-Alcoholic Beverages
Restaurant & Hotels
Miscellaneous Goods & Services
Health
Education
Furnishings, Household Equip & HH Maint.
Transport
Clothing & footwear
Housing, Water, Elect. Gas & Other Fuel
Processed Food
Core

Communication
Recreation &
culture
Alcoholic Bev.
Tobacco & Kola
Non-Alcoholic
Beverages
Restaurant &
Hotels
Miscellaneous
Goods &
Services
Jan-24 Feb-24 Mar-24 Apr-24 May-24 Jun-24

Inflation
SA Inflation


CBN Monetary Policy Review

3.2.3 Moderating Factors
In
response
to
the
upsurge
in
inflationary
pressures,
the
Bank
maintained a tight monetary policy
stance in the review period to rein in
inflation and stabilize the exchange rate.
Consequently, the Monetary Policy Rate
was raised in the three meetings held in
the review period, from 18.75 per cent in
January to 26.25 per cent by May, a
cumulative increase of 750 basis points.
Additionally,
the
Cash
Reserve
Requirement was raised to 45.0 per cent
from 32.5 per cent. The Bank also
conducted Open Market Operations to
manage the level of liquidity in the
system. From the fiscal side, the release
of 42,000 metric tonnes (MT) of food
commodities from the National Strategic
Food Reserve (NSFR), disbursement of
various palliatives to businesses and
households, and release of 2.15 million
bags of fertilizer contributed to boost
food supply.

3.3
Monetary
Policy
and
Liquidity
Management
The first half of 2024 was characterised
by developments in the domestic and
international
financial
and
macroeconomic environments, which
subsequently
impacted
on
central
banks’ monetary policy implementation.
Globally,
monetary
and
financial
conditions
remained
relatively
tight
even though central banks in the
advanced
economies
commenced
policy normalisation, while emerging
market central banks maintained tight
rates. This trend was driven by persistent
inflationary
pressures,
which
necessitated a cautious approach to
policy normalisation.

Specifically,
in
the
advanced
economies, major central banks such as
the US FED and the ECB maintained
relatively high policy rates despite
guidance
of
gradual
policy
normalisation due to the slow but steady
descent of inflation. Similarly, central
banks in emerging market economies
maintained a tight policy stance due to
persistent inflationary pressure, as a
number of countries in the group
continued to experience rising inflation.

On
the
domestic
front,
several
developments contributed to liquidity
surfeit in the banking system and the real
economy. Notable amongst these is the
impact of exchange rate revaluation on
foreign currency balances of domestic
banks, monetised proceeds of crude oil
taxes and royalties, and monetisation of
Government foreign currency loans.
These resulted in increased Federation
Account Allocation Committee (FAAC)
disbursement to the three tiers of
government. These liquidity sources
contributed
to
rising
inflation
and
exchange rate pressure. Consequently,
monetary policy sustained a tight stance
in the review period to curb the rise in
domestic
prices
and
moderate
exchange rate volatility.

3.3.1
Instruments
of
Liquidity
Management
In the review period, the Bank was
focused on achieving its price stability
mandate in the light of rising inflation
and exchange rate pressure. To achieve


CBN Monetary Policy Review

this,
the
Bank
deployed
several
monetary
policy
instruments
complemented
by
macroprudential
policies. The monetary policy instruments
included the Monetary Policy Rate
(MPR),
Cash
Reserve
Requirement
(CRR), Liquidity Ratio (LR), discount
window operations, and Open Market
Operations (OMO) to manage liquidity.
The
macroprudential
policies
were
deployed periodically to augment the
potency
of
the
monetary
policy
instruments and provide guidelines to
ensure
financial
system
stability.
Furthermore,
the
Bank
maintained
surveillance over the foreign exchange
market to promote transparency and
ensure that participants operate within
the set guidelines.

3.3.1.1Monetary Policy Rate (MPR)
The
Monetary
Policy
Rate
(MPR)
remained the primary instrument for
signalling the stance of monetary policy
in the period under review. The MPR was
raised by a cumulative 750 basis points
in the first half to 26.25 per cent from
18.75 per cent.

In addition, the Bank also adjusted the
asymmetric corridor around the MPR,
narrowing it to +100/-300 basis points
from +100/-700 basis points.

3.3.1.2 Open Market Operations (OMO)
In the period under review, Open
Market Operations (OMO) was the
primary
instrument
for
liquidity
management.
This
was
a
marked
change from the first half of 2023, where
there were no OMO auctions. Thus, total
OMO auctions increased significantly by
594.04 per cent to ₦5,052.61 billion in the
first half of 2024 from ₦728.00 billion in the
preceding half of 2023 (Table 3.3.1).

Table 3.3.1: OMO Bills Auction (January 2023 –
June 2024) (N’billion)
Date

%
Change
Jan
-
1,008.20
-
Feb
-
-
-
Mar
-
1,056.30
-
Apr
-
676.65
-
May
-
538.29
-
Jun
-
1,773.16
-
1st Half
0.00
5,052.61
-
Jul
-


Aug
150.00


Sep
-


Oct
400.00


Nov
77.20


Dec
100.80


2nd Half
728.00


Cumulative
Figure
728.00


Source: CBN

3.3.1.3 Reserve Requirements
In the first half of 2024, the Cash Reserve
Requirement (CRR) for Other Depository
Corporations (ODCs) was raised to 45.0
per cent in February 2024 from 32.5 per
cent. Similarly, the CRR for Merchant
Banks was also increased to 14.0 per
cent
from
10.0
per
cent.
These
adjustments were aimed at further
tightening
liquidity
conditions
to
moderate inflationary and exchange
rate pressure.


CBN Monetary Policy Review

3.3.1.4 Standing Facilities
In the first half of 2024, the Standing
Facilities Corridor remained active as
Other Depository Corporations (ODCs)
continued
to
utilise
the
Bank’s
lending/deposit facilities to manage
their daily liquidity positions. Notably, in
May 2024, the asymmetric corridor was
narrowed to +100/-300 basis points
around the MPR, from +100/-700 basis
points.

The requests for the Standing Lending
Facility (SLF) significantly increased by
456.69 per cent to ₦52,095.06 billion in
the first half of 2024, from ₦9,357.92 billion
in the preceding period of 2023. This
development also represented a 452.72
per cent increase compared with the
corresponding period of 2023 (Table
3.3.2).

In contrast, transactions under the
Standing Deposit Facility (SDF) declined
by 21.44 per cent to ₦8,081.39 billion in
the first half of 2024, from ₦10,287.52
billion in the preceding period of 2023.
This, however, represented an increase
of 152.32 per cent compared with the
corresponding period of 2023 (Table
3.3.3).

Consequently,
transactions
at
the
Standing Facility window resulted in a
net lending position of ₦44,013.67 billion
in the first half of 2024, a significant
increase compared with ₦929.60 billion
and ₦6,222.45 billion in the preceding
and corresponding half-year periods,
respectively.

Table 3.3.2: CBN Standing Lending Facility
(January 2023 – June 2024) (N’billion)
Date

% Change
Jan

174.49

3,632.16
Feb

452.92

5,676.52
Mar

4,056.21

17,528.99
Apr

4,024.37

11,415.05
May

592.44

10,249.42
Jun

124.82

3,592.92
1st Half

9,425.25

52,095.06 452.72%
Jul

747.23
Aug

1,546.77
Sep

3,531.75
Oct

70.81
Nov

2,258.81
Dec

1,202.55
2nd Half

9,357.92
Total

18,783.17

52,095.06

Source: CBN

Figure 3.17: Standing Lending Facility (January –
June 2024)

Source: CBN


Jan
Feb
Mar
Apr
May
Jun
N'Billions
SLF


CBN Monetary Policy Review

Table 3.3.3: CBN Standing Deposit Facility
(January 2023 – June 2024) (N’billion)
Date

% Change
Jan
633.53
1,169.51
Feb
837.97
329.82
Mar
434.90
195.71
Apr
224.30
465.11
May
450.22
959.97
Jun
621.88
4,961.27
1st Half
3,202.80
8,081.39
152.32%
Jul
878.34
Aug
804.52
Sep
760.03
Oct
3,011.30
Nov
2,801.70
Dec
2,031.63
2nd Half
10,287.52
Total
13,490.32
8,081.39
Source: CBN

Figure 3.18: Standing Deposit Facility (January -
June 2024)

Source: CBN

3.3.1.5 Foreign Exchange Intervention
In the first half of 2024, the foreign
exchange
market
continued
to
experience depreciation, driven by
foreign exchange demand pressure. To
moderate the volatility and enhance
market
efficiency,
the
Bank
implemented
several
initiatives,
including the prohibition of dollardenominated collateral for naira loans,
reintroduction of the sale of FX to eligible
Bureau De Change (BDCs) Operators,
and removal of allowable limit of
exchange rate quoted by International
Money Transfer Operators (IMTOs).

Consequently,
the
total
foreign
exchange intervention by the CBN
decreased significantly by 76.74 per
cent to US$1,474.00 million in the first half
of 2024, from US$6,336.74 million in the
corresponding period of 2023. However,
compared with US$456.59 million in the
preceding half of 2023, this was an
increase of 222.83 per cent. Overall, the
Bank
has
remained
focused
on
promoting the primacy of market forces
in exchange rate determination (Table
3.3.4).

Table 3.3.4: Foreign Exchange Supply by the CBN
(US$ Million)

Source: CBN

Figure 3.19: Total FX Supply by the CBN (including
Forward Sales) January – June 2023

Source: CBN
Jan
Feb
Mar
Apr
May
Jun

N'Billion
SDF
Date

2024 % Change
Total FX Supply
(including
Forward Sales) Total FX Supply
Jan
1,343.78

-

Feb
1,078.44

443.00

Mar
1,153.76

196.00

Apr
1,078.44

162.00

May
1,124.78

592.00

Jun
557.54

81.00

1st Half
6,336.74

1,474.00

-76.74%
Jul
158.00

Aug
298.59

Sep
-

Oct
-

Nov
-

Dec
-

2nd Half
456.59


CBN Monetary Policy Review

3.3.2
Developments
in
Monetary
Aggregates
In
the
review
period,
monetary
aggregates
grew
significantly,
indicating a broad expansion of liquidity
in the economy. The increase was driven
primarily by a rise in demand deposits
and foreign currency deposits held by
ODCs, resulting from exchange rate
depreciation,
following
the
foreign
exchange
liberalisation
policy.
The
expansionary
fiscal
policy
also
contributed to the growth in monetary
aggregates.

On an annualised basis, the growth in
total monetary liabilities (M3) as of end
June 2024 exceeded the indicative
benchmark for the year. From the asset
side, the primary factors that drove the
growth in money supply were, increased
claims on both government and the
private sector. Moreover, Net Foreign
Assets (NFA) expanded as a result of
naira depreciation, making it a key
contributor to the overall growth in
money supply during this period.

3.3.2.1 Broad Money (M3)
In the first half of 2024, broad money
(M3) increased substantially by 54.79
and 27.88 per cent to ₦101,347.27 billion,
from ₦65,473.76 billion and ₦79,252.46
billion
in
the
corresponding
and
preceding periods, respectively. The
year-to-date growth rate in M3 at endJune 2024 of 27.88 per cent, surpassed
the
annual
provisional
growth
benchmark of 15.60 per cent, a faster
expansion than anticipated. The primary
drivers of the expansion in broad money
were
increase
in
foreign
currency
deposits held by ODCs, resulting from
exchange rate depreciation and rise in
demand deposits.

3.3.2.2 Narrow Money (M1)
Narrow Money (M1) increased by 47.83
and 22.10 per cent to ₦36,779.30 billion
in the first half of 2024, from ₦24,879.87
billion and ₦30,122.29 billion in the
corresponding and preceding periods,
respectively. The drivers of the growth in
M1 included Transferable Deposits of
ODCs which increased by 23.61 per
cent; and Currency Outside Banks which
grew by 10.38 per cent in the first half of
the year. The growth rate of M1 of 22.10
per
cent,
exceeded
the
annual
provisional growth benchmark of 15.68
per cent.

Figure 3.20: Volume of Money Aggregates (M1 &
M3) (January – June 2024)

Source: CBN, Dec 23


Jan-24
Feb-24
Mar-24
Apr-24
May-24
Jun-24
N' Trillion
M1
M3


CBN Monetary Policy Review

Figure 3.21: Growth in Money Aggregates (M1 &
M3) (January – June 2024)

Source: CBN
3.3.2.3 Net Foreign Assets (NFA)
Net Foreign Assets (NFA) increased
significantly by 218.77 and 96.34 per
cent to ₦18,334.95 billion in the first half
of 2024 from ₦5,751.87 and ₦9,338.45
billion
in
the
corresponding
and
preceding periods, respectively. The
overall increase in NFA in naira terms was
driven primarily by the effects of
exchange rate revaluation. Additionally,
Claims on non-residents grew by 42.88
per cent during the review period,
reflecting an increase in value of assets
held abroad. Similarly, Liabilities to Nonresidents increased by 30.51 per cent.

The growth in NFA as at end-June 2024
was significantly higher than the 2024
provisional growth target of 49.02 per
cent,
underscoring
the
impact
of
exchange rate depreciation during the
period.

3.3.2.4 Net Domestic Assets (NDA)
In the first half of 2024, Net Domestic
Assets (NDA) grew by 39.00 and 18.73
per cent to ₦83,012.32 billion, compared
with ₦59,721.89 billion and ₦69,914.01
billion
in
the
corresponding
and
preceding periods, respectively. The
growth in NDA during this period was
driven primarily by Other Items Net (OIN)
which increased by 52.44 per cent. Net
Domestic Credit (NDC) also contributed
marginally to the growth in NDA by 5.30
per cent. Overall, the growth in NDA at
end-June 2024 exceeded the annual
provisional benchmark of 11.80 per cent.
The moderate growth in NDC of 5.30 per
cent was driven mostly by Credit to the
Private Sector (CPS), which grew by
16.93 per cent. This was however, mostly
offset by the decline in Credit to
Government of 16.37 per cent, following
the securitisation of Ways and Means
advances at the beginning of the year.

Figure 3.22: Net Domestic Asset (NDA) (January -
June 2024)

Source: CBN

Figure 3.23: NDA, NDC and Other Assets (Net)
(January – June 2024)

Source: CBN

Jan-24 Feb-24 Mar-24 Apr-24 May-24 Jun-24
per cent
M1
M3
Jan-23
Feb-23 Mar-23 Apr-23 May-23 Jun-23

N''Billions
Jan-24
Feb-24
Mar-24
Apr-24
May-24
Jun-24
N''Billions
Net Domestic Asset
Net Domestic Credit
Other Items Net


CBN Monetary Policy Review

3.3.2.5 Credit to the Government (Cg)
Net Credit to Government (NCg)
contracted by 16.37 and 12.74 per cent
to ₦28,054.26 billion in the first half of

from
₦33,574.60
billion
and
₦32,149.00 billion in the corresponding
and preceding periods, respectively.
The year-to-date decline of -16.37 per
cent in NCG was lower than the annual
growth benchmark of 14.99 per cent.
The contraction reflects the decision by
government
to
reduce
monetary
financing.

3.3.2.6 Credit to the Private Sector (Cp)
Credit to the Private Sector (Cp)
increased by 34.20 and 16.93 per cent to
₦73,124.13 billion from ₦54,503.99 and
₦62,538.68 billion in the corresponding
and preceding periods, respectively. This
was largely driven by credit to the core
private sector by ODCs which increased
by ₦17.65 trillion in the review period.
However, the year-to-date growth of
16.93 per cent was lower than the
annual provisional growth benchmark of
22.65 per cent.

Figure 3.24: Domestic Credit to Private Sector
(January – June 2024)

Source: CBN, Dec 23
3.3.2.7 Monetary Base (MB)
The Monetary Base (MB) increased
marginally by 1.16 per cent to ₦25,023.19
billion from ₦24,735.52 billion at endDecember 2023. The marginal increase
was driven by 0.40 per cent growth in the
Required Reserves of ODCs during the
review
period.
The
growth
in
MB
exceeded
the
Q2-2024
provisional
benchmark of ₦24,835.18 billion by
₦188.01 billion. This indicates that the
monetary base performed relatively well
against the expected target for the
second quarter of 2024.

The increase in MB reflects the Bank's
efforts to manage liquidity in the
economy,
balancing the need to
support
economic
growth
while
containing inflationary pressures.


76479.5

81222.1

71426.6

73097.5

74731.9

73124.1

Jan-24
Feb-24
Mar-24
Apr-24
May-24
Jun-24
N'' Billions


CBN Monetary Policy Review

Table 3.3.4a: The Performance of Monetary Aggregates
Source: CBN, Dec 23


Table 3.3.4b: The Performance of Monetary Aggregates and their Implications
S/N
Monetary
Aggregates
Performance
Implication

Overall
Monetary
Aggregates
Above
their
respective
Annual
Targets
There is continuous expansion of money supply in the
economy, because the H1-2024 performance of the
monetary numbers outperform their respective annual
benchmarks.

Broad
Money
Supply (M3, M2)
Above
the
Annual
Target
Both M3 and M2 as at end-June 2024, performed relatively
above their annual benchmarks. Key drivers include
exchange rate revaluation effect on FCD, the growth in
transferable deposits of the ODCs, and currency outside
banks. Thus, these combined signify liquidity surfeit both in
the banking system and the economy at large.

Narrow Money
(M1)
Above the
Annual
Target
Increase in Transferable deposits, and COB are the major
drivers in the growth of M1 in the review period, with an
average growth of about N1.65 trillion year-to-date.
Importantly, COB stood at 4.05 trillion at end-H1 2024.

Net
Foreign
Assets (NFA)
Above the
Annual
Target
The performance of NFA in H1-2024 was unstable. It
experienced a sharp increase of about N9.0 trillion at endJune 2024 relative to December 2023. This was largely
caused by the impact of exchange rate unification that led
to revaluation. Meanwhile, there is an observed fluctuation
in NFA in the year 2024 which could be attributed to the
ongoing reconciliation in the Bank. Overall, year-to-date,
claims on Non-resident grew by 42.88 per cent in the review
period while Liability to Non-residents increased by 30.51 per
cent.
Actual
Actual
Actual
Benchmark
H1
H2
H1

M3 (N'b)

M3 (%)

M2 (N'b)

M2 (%)

M1 (N'b)

M1 (%)

RM (N'b)

RM (%)

NDC (N'b)

NDC (%)

Cg (N'b)

Cg (%)

Cp (N'b)

Cp (%)

NFA (N'b)

NFA (%)

NDA (N'b)

NDA (%)

Variables
H1:2024 Deviation
from Benchmark
Change in H1, 2024
over H2, 2023


CBN Monetary Policy Review

Net
Domestic
Assets (NDA)
Above
the
Annual
Target
The growth in NDA in the review period was largely
attributable to 52.44 per cent and 5.30 per cent in the
growth of NDC and Other Items Net (OIN), respectively. The
end-June 2024 growth in NDA of 18.73 per cent was higher
than the annual provisional indicative benchmark of 11.80
per cent. Meanwhile, NDC was driven by both CPS and
NCg.

Credit
to
the
Govt (Cg)
Below
the
Annual
Target
NCg decreased significantly compared to end-December
2023 and its corresponding period. Similarly on year-on-year
basis, NCg fell from N32,149.00 billion in June 2023 to
N28,054.26 billion in June 2024, this represents a decline of
12.74 per cent.

Credit
to
the
Private
Sector
(Cp)
Below
the
Annual
Target
CPS was lower than its annual provisional indicative
benchmark. This would slow aggregate demand and
consequently ease demand and inflationary pressures.
Source: CBN

3.4
Domestic
Financial
Market
Developments
In the first half of 2024, the performance
of
the
Nigerian
financial
market
continued
to
be
influenced
by
developments in both the global and
domestic economies. These included
the persisting war between Russia and
Ukraine; tensions in the Middle East as a
result of the standoff between Israel and
Hamas; rising debt levels, high global
interest
rates
and
tight
financial
conditions. In addition, the sustained
high yields on dollar-denominated assets
continued to attract capital away from
the EMDEs leading to exchange rate
pressure among these economies.

Despite significant reforms in the foreign
exchange market during the review
period, the naira faced considerable
depreciation due to increased demand
for foreign exchange. These reforms
include
the
resumption
of
foreign
exchange sales to Bureau de Change
(BDCs), review of the Net Open Position
(NOP) for ODCs and removal of quote
cap on the allowable limit for IMTOs. In
addition, the Bank settled all valid FX
obligations to boost confidence in the
economy.

The capital market was bullish during the
period under review reflecting improved
earnings
of
listed
companies.
This
performance was largely attributed to
increasing investor confidence and a
positive
market
outlook
as
the
recapitalisation exercise of banks kicked
off. This was also strengthened by
increasing foreign portfolio investments,
and high yield in the fixed income
market, amongst other factors.

In the money market, rates trended
upwards, reflecting the impact of tight
monetary policy to curtail money supply
growth
and
moderate
inflationary
pressure. Key sources of liquidity in the
review period were statutory FAAC
disbursement;
maturing
government
securities; and exchange rate gains.
However, the Open Buy Back (OBB)
segment of the market continued to
witness
higher
trading
activities,
compared with the interbank segment.


CBN Monetary Policy Review

To curtail inflationary pressures and
ensure the stability of the financial
system, the Bank tightened monetary
policy by a cumulative increase of MPR
by 750 basis points to 26.25 per cent from
18.75 per cent, adjusted the asymmetric
corridor to +100/-300 basis points from
+100/-700 basis points, and raised the
Cash Reserve Requirement (CRR) for
ODCs and merchant banks to 45.00 and
14.00 per cent from 32.50 and 10.00 per
cent, respectively, in the review period.

3.4.1
The Money Market
During the first half of 2024, money
market rates largely trended upwards in
response to the tight stance of monetary
policy. The OBB segment of the market
dominated activities with the rate rising
to an average of 25.35 per cent,
compared with 12.60 per cent in the
corresponding period of 2023. The OBB
recorded its lowest rate of 16.89 per cent
in January 2024 and highest rate of 29.93
per cent in May 2024.

The interbank call rate averaged 24.82
per cent in the first half of 2024,
compared with 12.95 per cent in the
corresponding period of 2023. Rates in
the segment had a range of 16.43 per
cent and 30.29 per cent between
January
and
May
2024.
Market
participants demonstrated a preference
for the collateralised OBB over the
uncollateralised Interbank Call due to
perceived counterparty risk in the
uncollateralised segment.

The 30-day Nigerian Interbank Offered
Rate (NIBOR), which tracks the Nigerian
interbank short-term lending rates for
some selected banks also rose to an
average of 20.99 per cent in the first half
of 2024, compared with 13.59 per cent in
the corresponding half of 2023. The
NIBOR recorded its highest rate of 24.28
per cent in June 2024 and lowest rate of
15.48 per cent in January.

Overall, money market activities in the
review period were influenced by:
maturing
obligations;
FAAC
disbursements; and adjustments to the
Monetary Policy Rate, etc. (Table 3.4.1).

Table 3.4.1: Weighted Average Monthly Money
Market Interest Rates (%) (January-June 2024)
Period
Interbank
OBB
SDF
MPR
SLF
NIBOR
-

Days
Jan-24

Feb-24

Mar-24

Apr-24

May-24

Jun-24

Average

Source: CBN
Note: NIBOR figures daily averages

3.4.2

The Capital Market
The Nigerian capital market showed
positive performance in the first half of
2024,
reflecting
continued
investor
confidence
in
the
economy.
The
performance was driven largely by the
equities
market,
reflecting
investors
continued preference for equities over
bonds due to rising inflation. In the bonds
market, there was a decline in yields,
especially in the corporate and subnational bonds segment, due to rising


CBN Monetary Policy Review

inflation. Overall, the equities market
accounted for 54.28 per cent of
aggregate market capitalization at endJune 2024, compared with 55.41 per
cent in the corresponding period of
2023. The bonds market contributed
45.69 per cent in the first half of 2024,
compared with 44.57 per cent in the
corresponding period of 2023, while the
Exchange-Traded Fund (ETF) accounted
for the balance of 0.03 per cent,
compared with 0.02 per cent at endJune 2023.

Figure 3.25: Structure of the Nigerian Capital
Market (June 2024)

Source: NGX Group

3.4.2.1 Equities Market
The All-Share Index (ASI) increased by
33.81 per cent to 100,057.49 at end-June
2024, from 74,773.77 at end-December
2023. On
a year-on-year basis, it
increased by 64.11 per cent compared
with
60,968.27
at
end-June
2023.
Similarly, Market capitalization (MC)
increased by 38.33 per cent to N56.60
trillion at end-June 2024 from N40.92
trillion
at
end-December
2023.
Compared
with
the
corresponding
period of 2023, it increased by 70.49 per
cent to N56.60 trillion at end-June 2024
from N33.20 trillion at end-June 2023.

Figure 3.26: NGX All Share Index (ASI) and Market
Capitalization (MC) (June 2023 - June 2024)

Source: NGX Group

Aggregate stock market turnover in the
first half of 2024 stood at 60.76 billion
shares, valued at N1,244.48 billion in
1,153,215 deals. This represents a decline
of 12.51 per cent compared with 69.45
billion shares valued at N1,065.09 billion
in 935,891 deals in the second half of
2023. Year-on-year, it also decreased by
8.38 per cent from 66.32 billion shares,
valued at N707.60 billion in 598,639 deals
at end June 2023.

On
sectoral
contribution,
market
capitalization was dominated by the
“Telecommunication” sector, with a
share of 21.86 per cent at end-June
2024, compared with 31.70 per cent at
end-June
2023.
Although
this
represented a 9.84 percentage points
decline,
the
sector’s
contribution
outweighed that of other sectors (Figure
3.29).


FGN Bonds
State/Municipal bonds
Corporate bonds
Equities
ETP

Jun-23 Jul-23 Aug-23 Sep-23 Oct-23 Nov-23 Dec-23 Jan-24 Feb-24 Mar-24 Apr-24 May-24 Jun-24
(N' Trillion)
All Share Index
Equities Market Capitalisation (N' Trillion)


CBN Monetary Policy Review

Figure 3.27: NGX Market Capitalization by Sector
as at end-June 2024

Source: NGX Group

3.4.2.2 Bond Market
In the first half of 2024, Federal
Government of Nigeria (FGN) securities
continued to dominate bond market
activities.
Corporate
bonds
ranked
second in market volume, while state
and municipal bonds had the least
activity during the period.

The value of FGN bonds increased
significantly by 41.20 per cent to N46.13
trillion at end-June 2024 from N32.67
trillion at end-December 2023. This also
reflects an increase of 82.77 per cent
compared with N25.24 trillion recorded
at
end-June
2023.
FGN
bonds
accounted for 44.23 per cent of
aggregate market capitalization at endJune 2024. The value of corporate bonds
and state/municipal bonds were N1.17
trillion and N349.00 billion accounting for
1.12 and 0.33 per cent, respectively, of
aggregate market capitalization.

The 10-year dollar-denominated bond
yield for Nigeria was positive in the first
half of 2024. Compared with June 2023,
however,
it
decreased
by
1.17
percentage points to 9.03 per cent at
the end of June 2024 from 10.20 per
cent. Similarly, it declined by 0.07
percentage point compared with 9.10
per cent recorded in December 2023
(Figure 3.28).

Figure 3.28: 10-Year U.S. Dollar-denominated
Bond Yield for Nigeria (June 2021 – June 2024)

Data Source: Bloomberg

The yield curve at end-June 2024
increased at both the short and long
ends compared with the previous
period, even though it was inverted. The
increasing yields at the short end of the
curve reflects the market’s response to
the tight stance of monetary policy. The
Central Bank’s continued drive towards
taming inflation will eventually result in
an up-trending yield curve as inflationary
pressure ease.


Bond yield


CBN Monetary Policy Review

Figure 3:29: FGN Bond Yield Curves: December
29th, 2023, & June 28th, 2024.

Data Source: Financial Markets Dealers Quotation
(FMDQ)

Activities
in
the
Corporate
bond
segment declined marginally in the
review period. Outstanding corporate
bonds fell by 1.68 per cent to ₦1.17 trillion
by end-June 2024 from ₦1.19 trillion at
end-December 2023.
This may be
attributed to declining yields in the
market.

Activities in the Sub-national bond
market also slowed in the review period,
remaining lower than in the corporate
and
federal
government
bond
segments. Consequently, outstanding
state/local government bonds declined
by 12.98 per cent to ₦349.00 billion at
end-June 2024 from ₦401.05 billion at
end-December 2023.

Overall, capital market performance
remained positive, reflecting continued
investor confidence in the economy as
the reforms take shape.

3.4.3
Foreign Exchange Market
The Nigerian foreign exchange market
witnessed the depreciation of the naira
against the US dollar due to heightened
demand pressures. The market was
driven by external and domestic factors
in the first half of 2024. These include
supply chain disruptions due to ongoing
geopolitical tensions across the globe
such as the Russia-Ukraine war, IsraelHamas war, and the tension between
the US and China, amongst others. In
addition, capital reversals due to high
yields on dollar-denominated assets led
to the depreciation of EMDE currencies
against the US dollar.

On the domestic scene, the Bank
sustained its implementation of the
market-determined
exchange
rate
framework,
targeted
at
improving
transparency and price discovery. This
resulted in price adjustments in response
to
the
interaction
of
supply
and
demand,
reflecting
market
fundamentals.

On the supply side, crude oil receipts
were
significantly
weak
as
crude
production
remained
below
the
country’s OPEC quota throughout the
review period. On the demand side, the
activities of speculators and rent-seekers
continued to exert heightened demand
pressures. Other activities such as the
importation
of
refined
petroleum
products and general consumer goods,
also
contributed
to
heightened
demand.

To sustain the implementation of the
market driven exchange rate policy, the
Bank introduced various policies such as:
the discontinuation of the cap on
Interbank FX transaction spreads to
allow for greater flexibility in pricing;
removal of restrictions on the sale of


Yield (%)
Time to maturity

28 Jun


CBN Monetary Policy Review

interbank proceeds to improve market
liquidity; sales of FX to Bureau De
Change (BDC) operators, to meet retail
market demand for eligible invisible
transactions, such as personal travel
allowances, and medical expenses, &
school fees. In addition, the Bank
maintained a tight monetary policy
stance during the period to curb
inflationary pressure and attract foreign
portfolios inflows. These policies helped
to restore market confidence, improve
financial
system
stability,
eliminate
arbitrage opportunities and improve
market transparency.

3.4.3.1 Average
and
End-Period
Exchange Rates
The average exchange rate at the
Nigerian
Foreign
Exchange
Market
(NAFEM) depreciated significantly in the
review
period.
Average
rates
depreciated by 40.86 per cent in the first
half of 2024 to ₦1,360.03US$ from
₦804.22US$ in the second half of 2023.

In
the
period
under
review,
the
exchange rate depreciated by 38.81
per cent to 1,470.69/US$ at end-June

from
₦899.89US$
at
endDecember-2023. The average endmonth rate rose to ₦1,419.52/US$ at endJune 2024, representing a significant
depreciation of 41.85 per cent. The
depreciation was largely driven by lower
crude oil receipts, due to production
below the OPEC quota, as well as high
interest
rates
in
the
advanced
economies which resulted in increased
capital
outflow
amidst
increasing
domestic demand.

Table 3.4.2: Average & End-Period Monthly Spot
Exchange Rate (N/US$), July 2023 – June 2024
Period
NAFEM
Weighted
Average
Rate
NAFEM
(End-Month)
2023: July
769.17
758.02
August
762.64
757.52
September
763.44
769.26
October
796.94
825.49
November
836.87
942.62
December
896.25
899.89
Average
804.22
825.47
2024: January
994.08
1,357.38
February
1,505.30
1,544.58
March
1,511.36
1,330.76
April
1,235.13
1,330.21
May
1,432.48
1,483.48
June
1,481.81
1,470.69
Average
1,360.03
1,419.52
Source: CBN

Figure 3.30: Monthly Naira/US Dollar Exchange
Rate July 2023 –June 2024

Source: CBN

Jul-23
Aug-23
Sep-23
Oct-23
Nov-23
Dec-23
Jan-24
Feb-24
Mar-24
Apr-24
May-24
Jun-24
I&E (End-Month)
NAFEM Weighted Average Rate


CBN Monetary Policy Review

3.4.3.2 Nominal
and
Real
Effective
Exchange Rates
In the review period, the Nominal
Effective
Exchange
Rate
(NEER)
increased by 62.75 per cent to an
average of 582.79 from 217.07 in the
corresponding period. Compared with
355.43 in the preceding period, it
increased by 39.01 per cent. The
increase
in
NEER
indicates
a
depreciation of the local currency
against
the
weighted
basket
of
currencies of Nigeria’s trading partners.
During the first half of 2024, the Real
Effective
Exchange
Rate
(REER)
increased by 52.64 per cent to 132.67
from 62.83 in the corresponding period.
Compared with 91.52 in the preceding
period of 2023, it increased by 31.02 per
cent. The increase in REER indicates
increase in trade competitiveness with
Nigeria’s trading partners as exports
became cheaper and imports become
more expensive.

Table 3.4.3: Average Nominal and Real Effective
Exchange Rates Indices (January 2023 – June
2024)
Period
`NEER
REER
Jan
207.23
62.30
Feb
205.39
60.97
Mar
204.56
59.80
Apr
207.35
59.77
May
206.08
58.42
Jun
271.85
75.70
2023: H1
Average
217.07
62.83
Jul
346.33
94.40
Aug
338.21
89.63
Sep
334.16
86.75
Oct
346.30
88.60
Nov
368.35
92.06
Dec
399.22
97.69
2023: H2
Average
355.43
91.52
Jan
418.36
100.09
Feb
662.72
154.7
Mar
666.50
151.39
Apr
539.02
120.16
May
627.35
137.03
Jun
643.00
137.65
2024: H1
Average
592.82
133.47
Source: CBN

Figure: 3.31: Nominal and Real Effective Exchange
Rates Indices (January 2023 – June 2024)

Source: CBN

3.4.3.3 Foreign Exchange Flows through
the CBN
Foreign exchange inflows through the
CBN increased by 44.36 per cent to
US$16,438.82 million at the end of first
half of 2024 from US$11,386.93 million in
the preceding half. Compared with the
corresponding
period
of
2023,
it
increased by 30.71 per cent from
US$12,576.13 million. Foreign exchange
outflows through the Bank increased by
21.19 per cent to US$14,721.87 million in
the first half of 2024 from US$12,146.97

N/US$
NEER
REER


CBN Monetary Policy Review

million
in
the
preceding
period.
Compared with US$15,223.76 million in
the corresponding period of 2023, it
decreased by 3.29 per cent.

In the first half of 2024, there was a net
inflow of US$2,873.91 million, compared
with net outflows of US$2,647.63 million
and
US$760.04
million
in
the
corresponding and preceding periods,
respectively.

Figure 3.32: Monthly Foreign Exchange Flows
through the CBN (Jan. 2023 – June 2024) (US$’
Billion)

Source: CBN

Table 3.4.4
Monthly Foreign Exchange Flows through the CBN
(Jan. 2023 – June 2024) (Billion US$)
Dates
Inflow
(CBN)
Outflow
(CBN)
Net Flow
(CBN)
Jan-23
1,841.14
2,298.49
-457.35
Feb-23
2,534.44
2,458.84
75.6
Mar-23
2,792.70
4,099.30
-1,306.60
Apr-23
2,358.20
2,389.14
-30.94
May-23
1,700.27
2,026.89
-326.61
Jun-23
1,349.38
1,951.10
-601.72
2023 H1
Total
12,576.13
15,223.76
-2,647.63
Jul-23
2,588.85
2,804.65
-215.8
Aug-23
2,436.90
2,982.08
-545.18
Sep-23
1,349.23
1,411.24
-62.01
Oct-23
2,275.95
1,540.50
735.45
Nov-23
1,126.34
2,515.16
-1,388.81
Dec-23
1,609.65
893.33
716.32
2023 H2
Total
11,386.93
12,146.97
-760.04
Jan-24
1,431.35
2,221.92
-790.57
Feb-24
3,256.11
1,793.65
1,462.45
Mar-24
3,399.43
4,994.37
-1,594.94
Apr-24
2,142.33
1,425.69
716.64
May-24
3,027.53
3,072.58
-45.05
Jun-24

3,182.07

1,134.25

2,873.9
2024 H1
Total
16,438.82
14,642.46
2,622.44
Source: CBN

3.4.3.4 Foreign Exchange Flow through
the Economy
Total foreign exchange inflow to the
economy increased significantly by
49.00 per cent to US$47,725.85 million in
the first half of 2024 from US$32,029.89
million in the second half of 2023.
Compared with US$33,733.50 million in
the corresponding half of 2023, it
increased by 42.47 per cent. Similarly,
foreign exchange outflows for the first
half of 2024 increased by 34.60 per cent
to US$20,123.93 million, compared with
US$14,949.83 million in the second half of
2023. Compared with US$17,294.26 in
the corresponding half of 2023, it
increased
by
16.36
per
cent.
Consequently, the net inflows stood at
US$27,601.92 million in the first half of
2024,
compared
with
US$17,535.06
million in the second half of 2023 and
US$16,439.24 million in the first half of
2023.


Jan-23
Mar-23
May-23
2023 H1 Total
Aug-23
Oct-23
Dec-23
Jan-24
Mar-24
May-24
2024 H1 Total
Inflow (CBN)


CBN Monetary Policy Review

Table 3.4.5: Monthly Foreign Exchange Flows
through the Economy (January 2023 – June 2024)
(US$ Million)
Source: CBN

Figure 3.33: Monthly Foreign Exchange Flows
through the Economy (January 2023 – June 2024)
(US$ Billion)

Source: CBN


3.5
Monetary
Policy
Committee
Meetings
In the first half of 2024, the Monetary
Policy
Committee
(MPC)
met
in
February, March, and May to review key
developments in the economy.

At the February 2024 meeting, the
Committee focused its policy decisions
on anchoring inflation expectations and
moderating exchange rate pressures.
Members expressed concern about the
persistence of inflationary pressures and
emphasized the Committee’s resolve to
reverse the trend.

The MPC also deliberated extensively on
various
distortions
in
the
foreign
exchange
market
putting
upward
pressure on the exchange rate and the
passthrough to inflation. The Committee
was, however, convinced that the
ongoing
reforms
in
the
foreign
exchange market will yield the desired
outcome in the short to medium term.

The
Committee
reviewed
the
key
financial soundness indicators of the
banking system and noted that the
system remained stable. To further
ensure the stability of the banking
system, the MPC called on the Bank to
increase system buffers by recapitalizing
the banks to improve their resilience to
shocks as well as strengthen surveillance
and compliance.

Based on the foregoing considerations,
the Committee decided by a majority to
raise the MPR by 400 basis points to 22.75
from
18.75
per
cent;
adjust
the
asymmetric corridor around the MPR to
Dates
Inflows(CBN)
Inflows
(Autonomous)
Total
Inflows
Outflows
(CBN)
Outflows
(Autonomous)
Total
Outflow
Net Flow
Net
Flow
(CBN)
Net Flow
(Autonomous)
Jan-


Feb-


Mar-


Apr-


May-


Jun-


H1
Total

Jul-23

Aug-


Sep-


Oct-


Nov-


Dec-


H2
Total

Jan-


Feb-


Mar-


Apr-


May-


Jun-


H1
Total

Billion (US$)
Total Inflows


CBN Monetary Policy Review

+100/-700 from +100/-300 basis points;
raise the Cash Reserve Ratio from 32.5
per cent to 45.0 per cent; and retain the
Liquidity Ratio at 30 per cent.

During the March 2024 meeting, the
considerations
of
the
Committee
continued to be focused on the high
level of inflation, emphasizing the need
to
effectively
anchor
inflation
expectations
as
well
as
ensure
exchange rate stability. Members noted
the continued rise in headline inflation,
driven largely by food prices owing to
supply shortages and high cost of
logistics
and
distribution.
The
Committee, therefore, was of the view
that addressing food insecurity is key to
containing inflationary pressures.

The Committee noted with satisfaction
the level of stability achieved in the
foreign exchange market since its last
meeting. This, in the view of Members
reflected the impact of the Bank’s
recent policy actions and reforms, as
well as increased transparency in the
market. In addition, the Committee
noted the efforts of the Bank in offsetting
verified foreign currency obligations, an
action that will greatly enhance investor
confidence
and
attract
foreign
investments to Nigeria.

The MPC also reviewed developments in
the banking system and noted that the
industry remained safe, sound, and
stable. The Committee thus, called on
the Bank to sustain its surveillance and
ensure
compliance
of
banks
with
existing regulatory and macroprudential
guidelines. The MPC also enjoined the
Bank
to
expedite
action
on
the
recapitalisation of ODCs to strengthen
the system against potential shocks.

Following
these
considerations,
the
Committee raised the MPR by 200 basis
points to 24.75 per cent from 22.75 per
cent; adjusted the asymmetric corridor
around the MPR to +100/-300 basis
points; retained the Cash Reserve Ratio
of Deposit Money Banks at 45.0 per cent;
adjusted the Cash Reserve Ratio of
Merchant Banks from 10.0 per cent to
14.0 per cent; and retained the Liquidity
Ratio at 30.0 per cent.

At the May 2024 meeting, the key focus
of the MPC was the achievement of
price stability. Members observed that
while year-on-year headline inflation
rose moderately in April 2024, the monthon-month measures of headline, food
and core all declined significantly. This
follows a decline (month-on-month) of
the headline and food measures in
March 2024, suggesting that the recent
tight stance of policy was beginning to
yield results.

Members further observed the recent
volatility in the foreign exchange market,
attributing this to seasonal demand, a
reflection of the interplay between
demand
and
supply
in
a
freely
functioning market system.

The Committee noted with satisfaction
that the banking system remains safe,
sound,
and
stable,
despite
the
headwinds confronting the economy. It
commended the recent recapitalization
initiative and urged the management to
sustain its regulatory oversight to ensure


CBN Monetary Policy Review

the continued stability of the banking
system.

Based on the foregoing considerations,
the Committee decided by a majority
vote, to raise the MPR by 150 basis points
to 26.25 per cent from 24.75 per cent;
retain the asymmetric corridor around
the MPR at +100/-300 basis points; retain
the Cash Reserve Ratio of Deposit
Money Banks at 45.00 per cent; and
retain the Liquidity Ratio at 30.00 per
cent.

The full Communiqués of the MPC
meetings held in the review period are
contained in the appendix.


CBN Monetary Policy Review

CHAPTER FOUR
ECONOMIC OUTLOOK AND RISKS

4.1 Outlook for Global Output
he global economy is forecast to
grow by 3.2 per cent apiece in 2024
and 2025, on the back of a strongerthan-expected
recovery
and
progressive disinflation supported by
improved supply chains across the
globe. Other driving factors include
declining production costs as energy
prices decelerate, rebound in labour
supply, and expected moderation in
monetary
policy
rates
in
major
advanced
economies
as
inflation
continues to decline towards their longrun targets.

Growth in the advanced economies is
projected to rise marginally to 1.7 per
cent in 2024 from 1.6 per cent in 2023
and improve further to 1.8 per cent in
2025.
The
projection
is
driven
by
strengthened
consumer
spending,
sustained job growth levels, higher real
wages, and rising asset prices. Growth in
this group is expected to be led by the
United States which is projected to
expand by 2.7 and 1.9 per cent in 2024
and
2025,
respectively,
reflecting
weaker demand due to gradual fiscal
tightening and softening labour market
conditions. In addition, the euro area is
projected to recover from 0.4 per cent in
2023 to 0.8 and 1.5 per cent in 2024 and
2025,
respectively.
In
the
United
Kingdom, output growth is projected to
improve to 0.5 and 1.5 per cent in 2024
and 2025, respectively, from 0.1 per cent
in 2023, driven by decelerating energy
prices and moderating inflation. Growth
in Japan is however, expected to
moderate to 0.9 and 1.0 per cent in 2024
and 2025, respectively, from 1.9 per cent
in 2023.

Growth in the Emerging Markets and
Developing Economies is projected to
decelerate marginally to 4.3 and 4.1per
cent in 2024 and 2025, respectively, from
4.5 per cent in 2023. Increased growth
projections for economies in the Middle
East, Central Asia and Sub-Sahara
Africa,
however,
are
expected
to
moderate the slowdown. In Emerging
and Developing Asia, growth in India is
projected to remain strong at 6.4 per
cent, apiece, in 2024 and 2025 on
account of increasing working-age
population
and
stronger
domestic
demand. Growth in Russia is, however,
projected to moderate to 2.6 and 1.2
per cent in 2024 and 2025, respectively
from 4.8 per cent in 2023, largely due to
declining
investments
and
private
consumption.
Growth
in
Brazil
is
projected to improve to 3.0 per cent in
2024 from 2.2 per cent in 2023, but
moderate to 1.5 per cent in 2025. This
reflects the lagged impact of monetary
policy tightening, fiscal consolidation
and slow performance in the agricultural
sector.
T


CBN Monetary Policy Review

Table 4.1 Global Output and Inflation Outlook

2024*
2025*
A. World Output


World Output


Advanced Economies


USA


Euro Area


Japan


UK


Canada


Other Advanced Economies


Emerging & Developing Economies


Latin America and the Caribbean


Middle East and Central Asia Africa


Sub-Saharan Africa


B. Commodity Prices (US Dollars)


Oil


Non-fuel


C. Consumer Prices


Advanced Economies


Emerging & Developing Economies


Source: IMF WEO, April 2024
*Forecast

4.2 Outlook for Global Inflation
Global inflation in the first half of 2024
decelerated unevenly from the peak of
6.8 per cent in 2023. According to the
IMF WEO, global headline inflation, is
projected to decline to 5.9 per cent in
2024 and 4.5 per cent in 2025. This is
expected to be driven by easing supplychain bottlenecks, moderating energy
and other commodity prices, and
sustained tight monetary policy by
central banks.

Consequently,
inflation
in
several
advanced economies is projected to
moderate to their objectives of 2.0 per
cent in 2024. In the emerging markets
and developing economies, inflation is
projected to moderate only slightly due
to disparities in trends amongst major
economies in the group. While inflation
in India and Russia is expected to
decline, it is projected to remain
elevated in Sub-Sahara Africa.

While headline inflation, which includes
volatile food and energy prices, is
receding,
core
inflation,
a
better
indicator of underlying price pressures, is
proving
more
persistent.
The
IMF
forecasts a slower decline for core
inflation, especially in emerging markets
and developing economies.


CBN Monetary Policy Review

Table 4.2 Global Inflation Outlook

2024*
2025*


Advanced
Economies
5.7
2.4
2.0

USA
4.1
2.9
2.0

Euro Area
5.4
2.4
2.1

Japan
3.3
2.2
2.1

Emerging &
Developing
Economies
19.4
18.8
13.1

China
0.2
1.0
2.0

Russia
5,9
6.9
4.5

India
5.4
4.6
4.2

Sub-Saharan
Africa
16.2
15.3
12.4

Nigeria
24.7
26.3
23.0

Ghana
37.5
22.3
11.5

Angola
13.6
22.0
12.8

LIC
21.8
19.0
15.4

Ethiopia
30.2
25.6
18.2

Source: IMF WEO, April 2024
*Forecast


4.3 Outlook for Domestic Output Growth
The economic recovery is projected to
continue in the second half of 2024,
premised
on
sustained
growth
momentum
in
the
non-oil
sector,
particularly in financial services and
information & telecommunications. This
will also be supported by expansion in
the oil sector, following increased crude
oil production and evacuation in Bonny
Forcados,
and
Tulja-Okwuibome
terminals.

Headwinds to the recovery include
infrastructural deficits, persisting security
challenges, rising public debt stock and
limited fiscal space. Others include
exchange rate pressures and tight
financial
conditions.
Nevertheless,
enhanced
initiatives
by
the
fiscal
authority to improve tax revenue are
expected
to
improve
Government
finances.

Considering the foregoing, the Central
Bank of Nigeria (CBN) forecasts real GDP
to grow by 3.38 per cent in 2024 from
2.71 per cent in 2023.

Figure 4.3 Nigeria’s GDP growth outlook

Source: CBN Staff Estimates

4.4 Outlook for Domestic Inflation
The outlook for domestic inflation in the
second half of 2024 indicates a gradual
moderation across all measures. This
projection is premised on sustenance of
the current policy stance of the Bank,
barring unforeseen shocks. Headline
inflation
is
expected
to
trend
downwards from 34.19 per cent in June
2024 to 32.15 and 32.62 per cent in
August and September, respectively,
but will rise to 34.81 per cent in
December
2024.
Core
inflation
is,
however, projected to rise from 27.40 per
cent in June 2024 to 27.97 and 29.17 per
cent in September and December,
respectively. Food inflation is projected
to moderate from 40.87 per cent in June
2024 to 39.98 per cent in December
2024.


Q1

Q2

Q3

Q4

Q1

Q2
2024F
Q3
2024F
Pessimistic
Baseline
Optimistic
Actual


CBN Monetary Policy Review

Despite the projection for increase in
inflation in the second half, factors that
could dampen inflation build up include
the impact of the sustained tight
monetary policy stance of the Central
Bank of Nigeria; recent fiscal measures,
such as the suspension of taxes on
certain
imported
goods;
and
improvement in policy coordination
between the
fiscal and monetary
authorities.

Upside risks to the inflation outlook
remain
the
persisting
supply-side
challenges, including lingering security
issues affecting agricultural production;
continued exchange rate pressures; and
rising energy cost amongst others.


Table 4.4 Inflation Forecast

Year-on-Year Inflation Forecast
Status
Headline Inflation
Core Inflation
Food Inflation
Actual/Realized Data
2024m1
29.9
23.59
35.41
2024m2
31.7
25.13
37.92
2024m3
33.2
25.9
40.01
2024m4
33.69
26.84
40.53
2024m5
33.95
27.04
40.66
2024m6
34.19
27.4
40.87
2024m7
32.54
25.55
39.14
Point Forecast
2024m8
32.15
27.58
37.52
2024m9
32.62
27.97
38.04
2024m10
33.12
28.31
38.69
2024m11
34.60
28.75
39.93
2024m12
34.81
29.17
39.98


4.5
The Outlook for Monetary Policy
in the Second Half of 2024
Monetary policy in the second half of
2024 will be shaped by developments in
the global and domestic economies. In
the global economy, the recovery
remained resilient in the first half of 2024,
supported
by
robust
private
consumption in key economies. It is thus
projected to expand steadily in 2024
and 2025 despite identified headwinds.
While the overall risk profile appears to
be balanced, there are significant nearterm risks that could potentially hinder
the recovery. Some of the primary
concerns are, the sluggish pace of
disinflation, particularly in the services
sector, re-escalation of trade tensions
and
continuation
of
geopolitical
tensions,
which
pose
inflationary
pressures.
While
monetary
policy
tightening by major central banks
appears to have peaked, the delicate


CBN Monetary Policy Review

process of easing monetary policy, as
global financial conditions improve, will
increase
employment,
strengthen
aggregate demand and support output
growth.

The domestic economic landscape is
currently navigating a complex array of
challenges that are influencing the
direction of monetary policy. Among the
most pressing concerns is the persistence
of inflationary pressures, which is exerting
significant strain on the purchasing
power of consumers and the cost
structure
of
businesses.
This
is
compounded by continued security
challenges, particularly in agricultural
and oil-producing regions, which is
disrupting
supply
chains
and
exacerbating
inflation.
Nigeria's
increasing debt service burden may limit
future fiscal flexibility and investment in
critical sectors to upscale domestic
production of goods and services. In
addition, foreign exchange demand
pressure in the face of limited supply
continues to exert passthrough effect on
domestic
prices.
Other
challenges
include: the rising cost of energy, which
is
directly
impacting
the
cost
of
production
and
services;
structural
impediments; and limited access to
finance,
which
continue
to
stifle
economic
diversification
and
productivity.

Monetary policy in the second half of
2024 will, therefore, be guided by the
likely impact of these developments on
the Nigerian economy in line with the
Banks objective of price and financial
system stability.

4.6 The Risks to the Outlook

4.6.1
Risks
to
The
Global
Output
Projection
While
the
global
economy
has
exhibited remarkable recovery with
inflationary pressures easing sufficiently
to prompt rate cuts by central banks in
various regions, the outlook remains
vulnerable to several risk factors. These
include
escalation
in
geopolitical
tensions,
particularly
in
major
commodity-producing regions, with the
potential
of
disrupting
global
commodity
supply
chains;
growing
trend of trade fragmentation, driven by
protectionist
policies
and
shifting
alliances, which could destabilise global
trade networks, create inefficiencies
and dampen the economic growth.

Moreover, the persistence of inflation in
some EMDEs could delay monetary
easing, thereby constraining global
economic activities and prolonging the
uncertainty. Increase in debt levels, and
potentially high default risk by some
EMDEs could pose a risk to global output
recovery
with
the
implication
of
narrowing
fiscal
space.
This
could
constrain governments capacity to fund
critical
infrastructure
necessary
to
support expansion of production.

The upcoming U.S. presidential election
in November 2024 represents another
uncertainty to the global economic
landscape.
The
success
of
Vice
President Kamala Harris would likely
ensure
broad
policy
continuity,
particularly in areas such as international
trade,
climate
policy,
and
fiscal


CBN Monetary Policy Review

management. However, a potential
return to office by former President
Trump could introduce a high degree of
uncertainty,
given
his
previous
administration's approach to tariffs, fiscal
stimulus,
regulatory
rollbacks,
and
immigration policies. Such policy shifts
could trigger inflationary pressures and
introduce volatility in global financial
markets.

4.6.2 Risks to Domestic Output
The
domestic
outlook
remains
cautiously optimistic with pre-existing
structural
headwinds
and
external
shocks, which could undermine the
productive capacity of the economy,
posing risks to sustained growth. In the
face of the continued weak inflows of
foreign direct investment (FDI), the
recovery of output growth may remain
moderately subdued. Energy supply
challenges
and
the
high
cost
of
electricity, continue to exert upward
pressure on inflation. These, coupled
with weak consumer demand, could
further restrict economic activities. The
oil sector remains particularly vulnerable,
with incidences of oil theft, vandalism of
oil infrastructure, aged and inadequate
oil
facilities,
leading
to
frequent
production shutdowns. These challenges
are compounded by the low level of
new investments in the sector, which
continue to undermine production.

4.6.3 Risks to Domestic Inflation Outlook
Although inflation
is
expected
to
moderate, upside risks remain. These
include the high volume of system
liquidity, persisting foreign exchange
demand pressure, lingering security
challenges in key agricultural regions,
adverse climatic conditions such as
flooding, and the rising cost of energy.
Furthermore, the increase in the national
minimum wage could lead to a build-up
of
inflation
expectations
thereby
complicating efforts to stabilise the
economy and maintain price stability.


CBN Monetary Policy Review

APPENDICES

CENTRAL
BANK
OF
NIGERIA
COMMUNIQUÉ
NO.

OF
THE
MONETARY POLICY COMMITTEE MEETING
HELD ON MONDAY 26th AND TUESDAY
27th FEBRUARY 2024

1.0
Background
The Monetary Policy Committee (MPC)
of the Central Bank of Nigeria (CBN) held
its first meeting for the year on the 26th
and 27th of February 2024 to decide on
the appropriate course of monetary
policy going forward. All twelve (12)
members of the Committee attended
the meeting.

Decisions of the MPC
The Committee decided to further
tighten monetary policy as follows:
Raise the MPR by 400 basis points to
22.75 from 18.75 per cent.
Adjust the asymmetric corridor around
the MPR to +100/-700 from +100/-300
basis points.
Raise the Cash Reserve Ratio from 32.5
per cent to 45.0 per cent.
Retain the Liquidity Ratio at 30 per cent.

Considerations
The
Committee’s
decisions
were
centered on the current inflationary and
exchange rate pressures, projected
inflation,
and
rising
inflation
expectations.
Members
were
concerned about the persistent rise in
the level of inflation and emphasized the
Committee’s commitment to reverse the
trend as the balance of risk leaned
towards rising inflation. The Committee,
however, acknowledged the trade-off
between the pursuit of output growth
and taming inflation but was convinced
that an enduring output expansion is
possible only in an environment of low
and stable inflation.

Members noted the decision to transit to
an inflation targeting framework as
essential to addressing the persistence
of inflationary pressures in the economy
and commended the fiscal authority for
their invaluable support.

In the opinion of the Committee, the
options available for decision was to
either hold or hike the policy rate to
offset the persisting inflationary pressure.

Considering the option of a hold policy,
the evidence revealed that previous
policy rate hikes have slowed the rise in
inflationary pressure but not to a
desirable extent. Members considered
various scenarios of hold and hike, and
concluded that, inflation could become
more persistent in the medium-term and
thus pose more regulatory challenges if
not effectively anchored. The balance
of
the
argument
thus
leaned
convincingly in favour of a significant
policy rate hike to drive down inflation
substantially.

The MPC also deliberated extensively on
various
distortions
in
the
foreign
exchange
market
including
the
activities of speculators, putting upward
pressure on the exchange rate with high
pass-through to inflation. Members were,
however, convinced that the ongoing
reforms in the foreign exchange market


CBN Monetary Policy Review

will yield the desired outcome in the
short to medium term. Some of these
reforms include: the unification of the
foreign exchange market; promotion of
a willing buyer willing seller market;
removal of all limits on margins for
IMTO remittances; introduction of a twoway quote system and the broad
reforms in the BDC segment of the
market to restore stability, enhance
transparency,
boost
supply,
and
promote price discovery in the Nigeria
Autonomous Foreign Exchange Market
(NAFEM).

The
Committee
reviewed
the
key
financial indicators of the banking
system and noted that the system
remained stable. To further ensure the
stability of the banking system, the MPC
called on the Bank to increase system
buffers by recapitalizing the banks to
improve resilience against potential risks.
Members further enjoined the Bank to
strengthen surveillance and compliance
regarding its earlier guidance on the
application
of
foreign
exchange
revaluation gains.

The Committee identified non-monetary
factors driving inflation such as the
persisting insecurity and infrastructural
deficits and noted the role of fiscal
policy in addressing these shortfalls,
while reiterating the commitment of
monetary policy support. In this regard,
the Committee applauded fiscal policy
initiatives towards reducing the cost of
living for ordinary Nigerians, including
the ongoing efforts to improve food
supply and provide mass transit CNG
buses to ease the cost of transportation;
and the civil service reforms to improve
the efficiency of government amongst
others.

Key Developments in the Domestic and
Global Economies
Headline inflation (year-on-year) rose
to 29.90 per cent in January 2024 from
28.92 per cent in December 2023. Food
inflation increased to 35.41 per cent from
33.93 per cent while core inflation
(Headline
less
farm
produce
and
energy) rose to 23.59 per cent from 23.07
per cent. The major factors driving
inflationary pressure remain exchange
rate pass-through, rising cost of energy,
high fiscal deficits, and lingering security
challenges in major food-producing
areas. In addition, global factors such as
tight financial conditions and trade
disruptions from ongoing geopolitical
tensions, remain significant upside risks to
the outlook for domestic inflation. Staff
forecasts therefore indicate that inflation
will remain on an upward trajectory in
the near term before commencing a
descent.

Real GDP growth improved in Q4 2023 to
3.46 per cent, compared with 2.54 per
cent in the previous quarter, driven by
improvements in both the oil and non-oil
sectors. The recent improvement in the
oil sector was due to the combined
impact
of
increase
in
crude
oil
production and a relatively high price in
Q4 2023. Forecasts indicate that the
economy will grow in 2024 by 3.38 per
cent (CBN), 3.88 per cent (FGN) and 3.00
per cent (IMF).

Gross external reserves stood at US$34.51
billion on February 20, 2024, compared


CBN Monetary Policy Review

with US$32.23 billion at end-January
2024. The improvement was driven by
reforms in the foreign exchange market
and an increase in oil production
amongst others.

In the global economy, inflation is
projected to continue to moderate in
2024 but could remain above the longterm objectives of several advanced
economy central banks. Consequently,
policy rates among this group of central
banks are expected to remain high in
the
short
to
medium
term.
The
Committee thus recognized the need to
continue to put in place measures to
boost investor confidence and to attract
capital inflows.

To this end, the Committee will continue
to monitor developments in the global
and domestic economies to ensure that
inflationary
and
exchange
rate
pressures moderate in the near term.

The next meeting of the MPC will be held
on 25th and 26th of March 2024. Thank
you for listening.

Mr Olayemi Cardoso
Governor,
Central Bank of Nigeria 27th February
2024.


CBN Monetary Policy Review

CENTRAL
BANK
OF
NIGERIA
COMMUNIQUÉ
NO.

OF
THE
MONETARY POLICY COMMITTEE MEETING
HELD ON MONDAY 25th AND TUESDAY
26th MARCH 2024

1.0
Background
The Monetary Policy Committee (MPC)
of the Central Bank of Nigeria (CBN) held
its 294th meeting on the 25th and 26th of
March 2024 to review recent economic
and financial developments as well as
assess risks to the outlook.

Decisions of the MPC
The Committee’s decisions are as
follows:
1.
Raise the MPR by 200 basis points
to 24.75 per cent from 22.75 per cent.
2.
Adjust the asymmetric corridor
around the MPR to +100/-300 basis points
3.
Retain the Cash Reserve Ratio of
Deposit Money Banks at 45.0 per cent.
4.
Adjust the Cash Reserve Ratio of
Merchant Banks from 10.0 per cent to
14.0 per cent.
5.
Retain the Liquidity Ratio at 30.0
per cent

Considerations
The considerations of the Committee at
this meeting focused on the current
inflationary pressures and the need to
anchor inflation expectations as well as
ensure sustained exchange rate stability.
These considerations underscore the
importance of the CBN’s commitment to
the price stability mandate and the
need to urgently bring inflation under
control to ensure that purchasing power
of ordinary Nigerians is restored in the
short to medium term.

Members noted the continued rise in
headline inflation, driven largely by food
prices because of supply shortages and
high cost of logistics and distribution. The
Committee, therefore, was of the view
that addressing food insecurity is key to
containing current inflationary pressures.
On this note, Members commended the
ongoing
efforts
of
the
Federal
Government towards addressing food
insecurity, some of these measures
include
the
provision
of
various
palliatives, release of grains from the
strategic reserves, distribution of seeds
and fertilisers, as well as farm implements
for dry season farming.

The Committee therefore called for the
full implementation of the Federal
Government’s agricultural policies and
programmes to improve food supply
and further advised for broader fiscal
consolidation
particularly
on
the
improvements of tax collection and taxto-GDP ratio.

The Committee noted with satisfaction
the level of stability achieved in the
foreign exchange market in the last few
weeks. This, in the view of Members
reflects the impact of the Bank’s recent
policy actions and reforms, as well as
increased transparency in the market. In
addition, the Committee noted the
efforts of the Bank in offsetting verified
foreign currency obligations, an action
that
will
greatly
enhance
investor
confidence
and
attract
foreign
investments to Nigeria.


CBN Monetary Policy Review

The MPC also reviewed developments in
the banking system and noted that the
industry remains safe, sound, and stable.

The Committee thus, called on the Bank
to sustain its surveillance and ensure
compliance of banks with existing
regulatory
and
macroprudential
guidelines. The MPC also enjoined the
Bank
to
expedite
action
on
the
recapitalisation of banks to strengthen
the system against potential risks in an
increasingly
globalized
world.
Consequently, at this meeting, the MPC
was faced with the option of either
progressing with its tightening cycle or
hold, to observe the impact of the
previous rate hike and adjustment of the
Cash
Reserve
Requirement.
After
reviewing the balance of risks and the
near-term inflation outlook, Members
were convinced of the need to progress
with the tightening cycle.

Key Developments in the Domestic and
Global Economies
Domestic headline inflation rose further
to 31.70 per cent in February 2024 from
29.90 per cent in January. Food inflation
accelerated to 37.92 per cent from 35.41
per cent, while core inflation rose to
25.13 per cent from 23.59 per cent. Key
drivers of inflationary pressure remain the
strong exchange rate pass-through to
domestic
prices;
rising
cost
of
transportation; high cost of energy and
other
production
inputs;
lingering
insecurity, especially in food- producing
areas; and legacy infrastructure deficits.
Data from the National Bureau of
Statistics showed that real GDP grew by
3.46 per cent in the fourth quarter of
2023, compared with 2.54 per cent in the
previous quarter. Staff forecasts for 2024
indicate that the Nigerian economy will
grow by 3.38 per cent.

Disruptions to the global supply chain,
associated with pockets of geopolitical
tensions continue to pose a key concern
to monetary policy. Global inflation has
however, continued to decelerate in
2024 but is expected to remain above
the long-run objectives of major central
banks. Interest rates of advanced
economy
central
banks
are
thus
expected to remain high in the short to
medium term before commencing a
descent. Consequently, global financial
conditions may remain tight through
2024. Accordingly, the Committee will
continue to monitor developments in the
global and domestic economies to
ensure that inflationary expectations are
anchored
to
restore
and
sustain
macroeconomic stability.

All twelve members attended the
meeting. The next MPC meeting will be
held on the 20th and 21st of May 2024.
Thank you.

Olayemi Cardoso
Governor,
Central Bank of Nigeria 26th March 2024.


CBN Monetary Policy Review

CENTRAL
BANK
OF
NIGERIA
COMMUNIQUÉ NO. 148 OF THE 291ST
MEETING OF THE MONETARY POLICY
COMMITTEE HELD ON TUESDAY 20TH AND
WEDNESDAY 21ST MAY 2024

1.0
Background
The Monetary Policy Committee (MPC)
of the Central Bank of Nigeria (CBN) held
its 295th meeting on the 20th and 21st of
May 2024 to review recent economic &
financial developments and assess risks
to the outlook.

Decisions of the MPC
The Committee’s decisions are as
follows:
1.
Raise the MPR by 150 basis points
to 26.25 per cent from 24.75 per cent.
2.
Retain the asymmetric corridor
around the MPR to +100/-300 basis points
3.
Retain the Cash Reserve Ratio of
Deposit Money Banks at 45.00 per cent.
4.
Retain the Liquidity Ratio at 30.00
per cent

Considerations
The key focus of the MPC at this
meeting remained to achieve price
stability
by
effectively
using
tools
available to the monetary authority to
rein in inflation.

Members observed that while year-onyear headline inflation in April 2024 rose
moderately,
the
month-on-month
measures of headline, food and core all
declined significantly. This follows a
decline (month-on-month) of headline
and food measures in March 2024,
suggesting
that
the
recent
tight
monetary policy stance of the Bank is
beginning
to
yield
the
desired
outcomes. The MPC, however, noted
that the inflationary pressure continues
to be driven largely by food inflation. The
Committee
thus
reiterated
several
challenges confronting the effective
moderation of food inflation to include
rising cost of transportation of farm
produce;
infrastructure-related
constraints along the line of distribution
network; security challenges in some
food producing areas; and exchange
rate pass-through to domestic prices for
imported food items. The MPC urged
that more be done to address the
security of farming communities to
guarantee improved food production in
these areas.

Members further observed the recent
volatility in the foreign exchange market,
attributing this to seasonal demand, a
reflection of the interplay between
demand
and
supply
in
a
freely
functioning market system.

The Committee also noted the marginal
increase in the external reserve balance
between March and April 2024 and
urged the Bank to sustain its focus on
accretion
to
reserves.
The
MPC
commended the Bank for the recent
approval of licenses of fourteen (14)
international Money Transfer operators
(IMTOs). This is expected to improve
competition and lower the cost of
transactions,
thus
attracting
more
remittances through formal channels.

The Committee noted with satisfaction
that the banking system remains safe,


CBN Monetary Policy Review

sound,
and
stable,
despite
the
headwinds confronting the economy. It
commended the recent recapitalization
initiative and urged the management to
sustain its regulatory oversight to ensure
the continued stability of the banking
system.

Members focused on the best policy
approach to continue to guide the
economy towards achieving an overall
macroeconomic
balance.
At
this
meeting, the Committee was thus faced
with the option of either continuing with
policy tightening or hold to observe the
impact of previous rate hikes. Following
an extensive review of risks and the nearterm inflation outlook, the balance of
risks suggests further tightening of policy
to build on the benefits accruing from
previous rate hikes.

Key Developments in the Domestic and
Global Economies
Domestic headline inflation rose further
to 33.69 per cent in April 2024, from 33.20
per cent in March, driven by both the
food and core components. On a
month-on-month
basis,
however,
headline inflation declined significantly
to 2.29 per cent in April 2024, from 3.02
per cent in March. The food and core
components also declined to 2.50 and
2.20 per cent from 3.62 and 2.54 per
cent, respectively, in the same period.
According to the National Bureau of
Statistics, real GDP grew by 3.46 per cent
in the fourth quarter of 2023, compared
with 2.54 per cent in the third quarter,
driven by both the oil and non- oil
sectors. Recent Purchasing Manager’s
Index (PMI) suggests that economic
activities will continue to expand in 2024.
In addition, staff forecasts indicate that
the domestic economy will grow by 3.38
per cent in 2024.

According to the IMF, global growth in
2024 and 2025 is projected at 3.2 per
cent apiece, while it revised Nigeria’s
growth upwards to 3.3 per cent from 3.0
per
cent
in
2024.
The
identified
headwinds to this projection are the tight
financial
conditions
and
broad
disruptions to the global supply chain
associated with geopolitical tensions
and economic fragmentations. While
these are feeding directly into a rally in
the prices of key commodities such as
grains
and
oil,
global
inflation
is
projected to continue to decelerate in
2024 but could remain above the longrun objectives of advanced economy
central banks. This group of central
banks are likely to pause their rate hike
cycles in the near term to observe the
trend of inflation.

Accordingly,
the
Committee
will
continue to monitor developments in the
global and domestic economies to
guide policy and ensure that inflation
expectations are adequately anchored.
All twelve members attended the
meeting. The next meeting of the
Committee will hold on the 22nd and
23rd of July 2024.

Thank you.

Olayemi Cardoso
Governor,
Central Bank of Nigeria 21st May 2024


CBN Monetary Policy Review