CENTRAL BANK OF NIGERIA
MONETARY
MONETARY
POLICY REVIEW
POLICY REVIEW
MONETARY
POLICY REVIEW
FEBRUARY 2025
FEBRUARY 2025
VOLUME XIII, NUMBER 1
VOLUME XIII, NUMBER 1
FEBRUARY 2025
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
©2025 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
CBN Monetary Policy Review
CBN Monetary Policy Review
CBN Monetary Policy Review
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 Developments ..
..
..

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 Inflation


4.4
The Outlook for Monetary Policy in the First Half of 2025..
..

4.5
The Risks to the Outlook ..


Appendices ..


List of Tables
Table 2.1: Policy Rates of Selected Countries January


2024 – December 2024


Table 2.2: Selected International Stock Market Indices as at


December 31, 2024


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


Bonds) as at December 31, 2024

..
..

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 (July – December 2024) ..
..
..

Table 3.3:
Major Components of Headline Inflation (Y-on-Y),


July – Dec. 2024


Table 3.4: Major Components of Headline Inflation (M-on-M),
v
CBN Monetary Policy Review
CBN Monetary Policy Review
CBN Monetary Policy Review
Page


Jul. – Dec. 2024..


Table 3.5:
Major Components of Food Inflation (Y-on-Y),


Jul. – Dec. 2024


Table 3.6:
Major Components of Food Inflation (M-on-M),


July – Dec. 2024)


Table 3.7:
OMO Bills Auction (July – December 2024) (N'Billion) ..

Table 3.8: CBN Standing Lending Facility (July – December 2024)
(N'Billion)


Table 3.9:
CBN Standing Deposit Facility (July – December 2024)
(N'Billion)


Table 3.10: Foreign Exchange Supply by the CBN (US$ Million). ..

Table 3.11a: Performance of Monetary Aggregates and Their
Implications.. ..


Table 3.11b:
The Performance of Monetary Aggregates and their
Implications


Table 3.12: Weighted Average Monthly Money Market Interest Rates


(%) July-December, 2024


Table 3.13: Average Monthly Exchange Rate (N/US$),


January – December 2024


Table 3.14:
Average Nominal and Real Effective Exchange Rates


Indices (July 2023 – December 2024) ..
..
..

Table 3.15:
Monthly Foreign Exchange Flows through the CBN


(July 2023 – December 2024) (Million US$)
..
..

Table 3.16:
Monthly Foreign Exchange Flows through the Economy


(July 2023 – December 2024) (US$ Million)
..
..

Table 4.1 Global Output and Inflation Outlook
..
..

Table 4.2 Global Inflation Outlook ..


Table 4.3 Inflation Forecast


List of Figures
Figure 2.1:
Global Output Growth (2018 - 2026) ..
..
..

Figure 2.2:
Global Inflation (2018 - 2026)..
..
..
..

Figure 3.1:
Gross Domestic Product Growth Rate (2022Q1 – 2024Q4).. 20
Figure 3.2:
Non-oil Sector Performance (2023Q1 – 2024Q4)
..

Figure 3.3: Oil Sector Performance (2023Q1 – 2024Q4) ..
..

Figure 3.4:
Sub-Components of Agricultural Sector Growth


(2023Q3 – 2024Q4)


Figure 3.5:
Sub-Components of Industry Sector Growth


(2023Q3-2024Q4)


Figure 3.6:
Sub-Components of Services Sector Growth


(Q1 2023 - Q4 2024)


Figure 3.7:
Quarterly Domestic Oil Production (2022Q2-2024Q4) ..

Figure 3.8: Monthly Bonny Light Oil Price, January - December 2024..

Figure 3.9:
Headline, Core, and Food Inflation Rates (July –


December 2024) ..


Figure 3.10:
Major Components of Headline Inflation (Y-on-Y), Jul. –


Dec. 2024


Page
vi
CBN Monetary Policy Review
CBN Monetary Policy Review
CBN Monetary Policy Review
Figure 3.11: Major Components of Headline Inflation (M-on-M),


Jul. – Dec. 2024


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


Dec. 2024


Figure 3.13: Major Components of Food Inflation (M-o-M), July –


December 2024..


Figure 3.14: Core Inflation Trends in Per cent (Y-on-Y) January –


December 2024


Figure 3.15:
Core Inflation Trends in Per cent (M-on-M) January –


December 2024


Figure 3.16:
OMO Bills Auction (Jul. – Dec. 2024) ..
..
..

Figure 3.17:
Standing Lending Facility (July – December 2024)
..

Figure 3.18:
Standing Deposit Facility (July – December, 2024)
..

Figure 3.19: Total FX Supply by the CBN (July – December 2024) ..

Figure 3.20: Money Supply (M1) and (M3) (July – December 2024)..

Figure 3.21:
Growth in Money Supply (M1) and (M3) (July –


December 2024)


Figure 3.22: Net Domestic Asset (NDA) (July – December 2024) ..

Figure 3.23: NDA, NDC and Other Assets (Net) (July – December 2024) 40
Figure 3.24: Domestic Credit to Private Sector (July – December 2024).. 40
Figure 3.25: Structure of the Nigerian Capital Markets


(December 2024)..


Figure 3.26: NGX ASI and MC (June 2024– December 2024)
..

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


December 2024


Figure 3.28:
10-Year U.S. Dollar-denominated Bond Yield for Nigeria


(January 2021 – December 2024)
..
..
..

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


Figure 3.30 Average Monthly Naira/US Dollar Exchange Rate


January –December 2024


Figure: 3.31 Nominal and Real Effective Exchange Rates Indices


(July 2023– December 2024) ..
..
..
..

Figure 3.32 Monthly Foreign Exchange Flows through the CBN


(January 2021 – May 2022) (US$' Billion)
..
..

Figure 3.33 Monthly Foreign Exchange Flows through the Economy


(July 2023 – December 2024) (US$ Billion)
..
..

Figure 4.1
Nigeria's GDP Growth outlook ..
..
..
..

CBN Monetary Policy Review
CBN Monetary Policy Review
CBN Monetary Policy Review
STATEMENT BY THE GOVERNOR
M
onetary policy in the second half of 2024 continued to be shaped by key
global and domestic macroeconomic and financial developments.
Major global developments include the outcome of the United States
(US) presidential election which introduces significant policy uncertainty,
particularly regarding concerns for protectionist trade policies and tariffs.
Concurrently, persistent geopolitical conflicts, including the ongoing war in Ukraine
and heightened tensions in the Middle East, continue to disrupt global supply chains
and influence commodity markets. In addition, there are divergent growth
trajectories among major economies. This is evident in the differing economic
outlooks for China, the Eurozone, and the United States, each grappling with distinct
internal and external pressures. This divergence in economic performance can lead
to misaligned monetary policies, further complicating the global financial
landscape. Furthermore, global financial conditions remain moderately restrictive,
and this tightness is a result of sustained efforts by central banks to combat inflation,
which has led to higher borrowing costs and a strengthening of some major
currencies.
On the domestic front, the Nigerian economy, while exhibiting signs of stabilization, is
grappling with significant structural bottlenecks and persistent demand-side
pressures. These factors collectively exert upward pressure on domestic price levels,
contributing to sustained inflation. Key drivers include the lingering insecurity in
agricultural regions which has constrained food production, leading to reduced
supply and increased food prices. In addition, high energy costs continue to
escalate operational expenses for businesses, contributing to cost-push inflation.
Also, a high fiscal deficit has a crowding-out effect on the private sector and
contributed to excess liquidity, further fuelling inflation.
Following a series of monetary and fiscal reforms, the Nigerian economy
demonstrated notable resilience with relatively strong output growth in the latter
half of 2024. This growth trajectory was a direct result of both the implemented
policies and the gradual adjustment of economic agents to these changes.
Accordingly, real GDP grew by 3.84 per cent in the fourth quarter of 2024, compared
with 3.46 per cent apiece in the corresponding and preceding quarters,
respectively.
In the domestic financial landscape, money market rates experienced an upward
trend, a direct consequence of the prevailing tight monetary policy and liquidity
dynamics. Concurrently, the capital market exhibited a sustained bullish trend
vii
throughout the period. This positive trajectory was fuelled by several key factors: the
ongoing recapitalisation exercise of Other Depository Corporations (ODCs),
notable rise in investor optimism in the market, and relatively high yields in the fixedincome market made it an attractive option for investors. Accordingly, the All-Share
Index (ASI) increased by 2.87 per cent to 102,926.40 at the end of December 2024,
from 100,057.49 at the end of June 2024, and translating to a year-on-year increase
of 37.65 per cent compared with 74,773.77 at end-December 2023.
The conduct of monetary policy was targeted at anchoring inflation expectations
through the continued use of orthodox monetary policy tools. The Monetary Policy
Rate (MPR) was the main instrument of policy in the second half of 2024, supported
by the Cash Reserve Requirement (CRR). The MPR was raised by a cumulative 125
basis points to 27.50 per cent in November 2024, from 26.25 per cent in May. The Bank
also adjusted the asymmetric corridor around the MPR to +500/-100 basis points in
July 2024 from +100/-300 basis points in May 2024.
In terms of outlook for the domestic economy, inflationary pressure is projected to
remain elevated in the first half of 2025, predicated on a combination of structural
and monetary factors. These include the lingering impact of fuel subsidy removal
and liberalization of the foreign exchange market, high fiscal deficit as well as
continued insecurity in key food-producing regions.
The Bank will continue to prioritise anchoring inflation expectations and preserving
exchange rate stability. As such, monetary policy in Nigeria would sustain a
tightening stance to effectively stay the course of policy efforts aimed at reining in
inflation and achieving price stability.
Olayemi Cardoso
Governor, Central Bank of Nigeria
viii
CBN Monetary Policy Review
CBN Monetary Policy Review
CBN Monetary Policy Review


CBN Monetary Policy Review

CHAPTER ONE

1.0
OVERVIEW
onetary policy in the second
half of 2024 continued to be
influenced by developments
at both global and domestic levels.

At
the
global
front,
the
key
developments
included
the
uncertainties
associated
with
the
election of a new U.S. president,
considering the potential escalation of
trade
tariffs;
ongoing
geopolitical
conflicts in the Middle East and the war
between Russia and Ukraine; divergent
growth
projections
across
major
economies such as China, euro area
and the United States (U.S.); and
moderately
tight
global
financial
conditions. Others were the attractive
yields on advanced-economy securities,
which led to capital flow reversals from
riskier Emerging Markets & Developing
Economies (EMDEs) securities, resulting in
increased exchange rate pressures and
volatility in commodity prices.

At the domestic level, the Nigerian
economy showed signs of stabilization
despite persistent demand pressures
and
structural
bottlenecks,
which
continued to push domestic prices
higher. Among the key challenges are
the
lingering
insecurity
in
foodproducing regions, high cost of energy
and production inputs, as well as high
fiscal deficit, all of which continue to
strain supply chains alongside persistent
demand pressure.

Accordingly,
inflationary
pressures
persisted in the second half of 2024 as all
three measures of inflation, namely
headline, food, and core inflation,
trended upwards in the period. Headline
inflation remained well above the upper
band
of
the
Bank’s
indicative
benchmark of 6-9 per cent. Headline
inflation (year-on-year) increased to
34.80 per cent in December 2024 from
33.40 per cent in July. Similarly, core
inflation rose to 29.28 per cent in
December 2024 from 27.47 per cent in
July.
Food
inflation
also
rose
in
December 2024 to 39.84 per cent from
39.53 per cent in July 2024.

Output growth in the Nigerian economy
was relatively strong in the second half
of 2024, reflecting the impact of the
reforms implemented
by both the
monetary and fiscal authorities, as well
as a gradual adjustment by economic
agents
to
earlier
reforms.
The
improvement in security during the
review period also supported economic
activities and investment flows into the
economy. The oil and non-oil sectors,
particularly the agricultural and services
sub-sectors,
remained
the
main
contributors to growth. In the fourth
quarter of 2024, real GDP grew by 3.84
per cent, higher than 3.46 per cent
apiece
in
the
corresponding
and
preceding quarters, respectively. This
was driven by the non-oil sector, which
grew by 3.96 per cent in the fourth
quarter of 2024, compared with 3.07 and
3.37 per cent in the corresponding and
preceding quarters, respectively. The
services sector, which grew by 5.37 per
cent, was the key driver of growth in the
non-oil
sector.
Accordingly,
the
contribution of the non-oil sector to the
overall GDP increased to 95.40 per cent
in Q4 2024 from 95.30 and 94.43 per cent
M


CBN Monetary Policy Review

in the corresponding and preceding
quarters, respectively. The oil sector
recorded a moderate growth of 1.48 per
cent, compared with 12.11 and 5.17 per
cent in the corresponding quarter of

and
the
preceding
quarter,
respectively.

In the second half of 2024, the Nigerian
foreign exchange market continued to
reflect
the
interplay
of
global
uncertainties
and
domestic
policy
interventions. Despite incidences of
volatility, the Central Bank of Nigeria
intensified efforts to improve supply and
stabilise the exchange rate. Several
policies were implemented by the Bank
during
the
period,
including
the
suspension of direct Sales of foreign
exchange (FX) to Eligible Bureau De
Change (BDC) Operators, which was
redirected to Authorized Dealers. This
was aimed at meeting the demand for
invisible transactions, such as personal
travel allowances, medical expenses,
and
school
fees,
thus
providing
additional liquidity to the market. The
Bank temporarily reintroduced the Retail
Dutch Auction System (RDAS) to stabilize
the market before commencing the
Electronic Foreign Exchange Matching
System (EFEMS). The EFEMS is a marketbased platform where willing buyers
electronically identify willing sellers at an
agreed price to minimise arbitrage and
speculation. In addition, the Nigerian
Foreign
Exchange
(FX)
Code
was
introduced as a set of guidelines to
govern
the
conduct
of
market
participants. The guidelines included six
active
pillars
which
provided
an
encompassing framework to promote
the integrity and effective functioning of
the wholesale FX market in Nigeria.

During the review period, the capital
market was bullish, reflecting a rise in
investor confidence and an optimistic
outlook. This trend was bolstered by the
ongoing recapitalisation exercise of
Other Depository Corporations (ODCs),
a surge in foreign investor participation
in the market, and comparatively high
yield in the fixed-income market, among
others.
The
All-Share
Index
(ASI)
increased by 2.87 per cent to 102,926.40
at the end of December 2024, from
100,057.49 at the end of June 2024. On a
year-on-year basis, it increased by 37.65
per cent from 74,773.77 at the end of
December
2023.
Similarly,
Market
capitalization (MC) increased by 10.88
per cent to N62.76 trillion at the end of
December 2024 from N56.60 trillion at
end-June 2024. Compared with the
corresponding
period
of
2023,
it
increased by 53.45 per cent from N40.92
trillion at the end of December 2023.

In
the
bond
market,
Federal
Government of Nigeria (FGN) bonds
dominated market activity in the second
half of 2024, with corporate bonds
ranking second in market volume, while
state and municipal bonds had the least
activity in the review period.

In the money market, rates trended
higher, reflecting the prevailing tight
stance of monetary policy. In the
interbank market, higher trading activity
occurred at the Open Buy Back (OBB)
segment than in the Interbank Call
segment,
reflecting
continued


CBN Monetary Policy Review

preference
for
collateralised
transactions.

The Bank continued to use its key policy
instruments,
complemented
by
macroprudential measures, to maintain
price and financial system stability
during the review period. The Monetary
Policy
rate
(MPR)
was
the
main
instrument in the second half of 2024,
supported
by
the
Cash
Reserve
Requirement (CRR). As part of the efforts
to rein in inflation, the MPR was raised to
27.50 per cent in November 2024, from
26.75 per cent in July, a cumulative
increase of 75 basis points. The Bank also
adjusted
the
asymmetric
corridor
around the MPR to +500/-100 basis points
in July 2024 up from +100/-300 basis
points in May 2024 and held it at this level
for the rest of the period. The Bank
continued
to
use
Open
Market
Operations
(OMO)
as
its
primary
instrument for liquidity management.
OMO
sales
in
the
review
period
increased to ₦8,259.15 billion from
₦725.00 billion in the corresponding
period and ₦6,092.58 billion in the
preceding half. This reflects Bank’s efforts
to manage the high level of liquidity in
the banking system.

For the outlook, economic activity is
expected to gain further momentum in
the first half of 2025, driven by the initial
benefits of exchange‐rate liberalisation
and reforms in the upstream sector of
the oil industry. These policy measures
are expected to strengthen the naira,
reduce
trade
deficits,
diversify
government revenue from crude oil
earnings, and expand fiscal space for
infrastructure
and
social
spending.
However, headwinds to the recovery
include
limited
access
to
capital,
elevated
public
debt
levels,
tight
monetary
conditions,
and
ongoing
geopolitical
uncertainties.
In
this
context, intensified efforts by the fiscal
authority to broaden the tax base and
enhance domestic revenue mobilization
will be crucial to improving public-sector
balance
sheets
and
sustaining
macroeconomic
resilience.
Consequently, the Central Bank of
Nigeria (CBN) forecasts real GDP growth
of 4.17 per cent in 2025 up from 3.38 per
cent in 2024.

Headline inflation is projected to remain
elevated in the first half of 2025, with
forecasts
indicating
a
modest
acceleration in price pressures. Inflation
is expected to rise from 23.81 per cent in
January 2025 to a peak of 25.42 per cent
in February, before easing gradually to
24.85 per cent by June 2025. Although
upside risks to inflation remain, due to a
combination of monetary, fiscal and
structural factors, it is expected that the
current
contractionary
stance
of
monetary policy will rein in inflationary
pressures in the near term. The upside
risks include lingering insecurity/banditry
in agricultural producing areas of the
country, causing food shortages, and
spillover
effects
from
the
Russian
Ukrainian war. Other factors that could
potentially induce inflationary pressures
are exchange rate volatility, capital flow
reversals, and high fiscal deficits. Some
attenuating factors, however, include
an increase in the monetary policy rate
and sustaining stability in the foreign
exchange
market.
As
the
Bank
continues to manage liquidity conditions


CBN Monetary Policy Review

using
conventional
instruments,
inflationary
developments
will
be
monitored to minimise risks to inflation
and growth. In this context, the Central
Bank of Nigeria will continue to prioritise
anchoring inflation expectations and
preserving exchange rate stability.

Consequently, the Central Bank of
Nigeria would sustain a tightening
stance to effectively stay the course of
policy efforts aimed at reining in inflation
and achieving price stability.


CBN Monetary Policy Review

CHAPTER TWO
THE GLOBAL ECONOMY

2.1 Global Output
Global economic growth remained
resilient despite ongoing challenges,
particularly the conflicts in Ukraine,
Palestine, and Lebanon, which continue
to pose a risk to the smooth operation of
the global supply chain in the near
future.
The
IMF's
World
Economic
Outlook
(January
2025)
estimated
global growth at 3.2 per cent in 2024,
slightly down from 3.3 per cent in 2023.

In the advanced economies, output
growth was estimated at 1.7 per cent in
2024, the same as in 2023, supported by
a rebound in real incomes that was
projected to fuel a cyclical recovery in
consumer spending. The United States
(U.S.)
economy
remained
resilient,
driven primarily by strong personal
spending on both goods and services,
and
by
investments
in
intellectual
property. However, the U.S. output
growth was estimated to slow slightly to
2.8 per cent in 2024 from 2.9 per cent in
2023. Euro area growth was estimated to
recover from 0.4 per cent in 2023, a year
marked by high exposure to the war in
Ukraine, to 0.8 per cent in 2024. The
rebound
was
driven
by
stronger
household consumption as energy price
shocks faded and inflation declined,
lifting real incomes. In Japan, the
economy was estimated to contract by
0.2 per cent in 2024, compared with the
1.5 per cent expansion in 2023, driven by
sluggish domestic demand due to high
inflation and a slowdown in global trade.
The United Kingdom (UK) economy was
estimated to grow by 0.9 per cent in
2024 from 0.3 per cent in 2023, driven by
robust domestic demand, supported by
strong profits and wage growth.

In the Emerging Market and Developing
Economies (EMDEs), output growth was
estimated to moderate to 4.2 per cent in
2024 from 4.4 per cent in 2023, driven by
existing and emerging headwinds. These
include
relatively
high
inflation,
exchange rate pressures, geopolitical
tensions, and the likely impact of the
new tariff regime in the US. In China, the
economy was estimated at 4.8 per cent
in 2024, compared with 5.2 per cent in
2023, due to a slowdown in the real
estate sector. Growth in India was
estimated to moderate to 6.5 per cent in
2024, from 8.2 per cent in 2023, driven by
declining
consumer
demand
amid
sluggish real wages and structural issues.
The Brazilian economy was estimated to
improve to 3.7 per cent in 2024, up from
3.2 per cent in 2023, on the back of
strong private consumption, fuelled by a
robust labour market and government
transfers. In Russia, output growth was
estimated at 3.8 per cent in 2024,
compared with 3.6 per cent in 2023,
driven by strong government spending.

In Sub-Saharan Africa, economic growth
was estimated at 3.8 per cent in 2024,
compared with 3.6 per cent in 2023,
supported by the fading impact of past
weather-related shocks and the easing
of supply constraints. The recovery will
be driven primarily by Nigeria and South
Africa. In Nigeria, output growth was
estimated at 3.1 per cent in 2024, up
from 2.9 per cent in 2023, reflecting the
benefits of recent economic reforms. In
South Africa, growth was estimated to
rise to 0.8 per cent in 2024, up from 0.7


CBN Monetary Policy Review

per cent in 2023. In Kenya, output growth
was estimated to moderate to 5.0 per
cent in 2024, compared with 5.6 per
cent in 2023. The Ghanaian economy
was estimated to grow by 3.1 per cent in
2024, up from 2.9 per cent in 2023.

Figure 2.1
Global Output Growth (2018 - 2026)

Source: IMF Database (2024)

2.2
GLOBAL INFLATION
Favourable global supply conditions
have
contributed
to
faster-thanexpected
disinflation,
with
recent
monthly headline and core inflation
approaching pre-pandemic averages.
Global headline inflation declined to 5.7
per cent in 2024 from 6.7 per cent in
2023, as the impact of earlier energy
price shocks faded and their passthrough to core inflation diminished.
Easing labour market conditions, a
modest rise in unemployment, and
increased labour supply have further
supported disinflation.

While
some
central
banks
in
the
Advanced
Economies
have
commenced policy easing, lingering
uncertainties have led to a cautious
approach. In the Emerging Markets and
Developing Economies, the pace of
disinflation is expected to be slower, due
to an infrastructural deficit, high energy
prices, elevated public debt, and
exchange rate pressures.

In the Advanced Economies, disinflation
progressed at a considerably faster
pace, with headline inflation projected
to decline to 2.6 per cent in 2024 from 4.6
per cent in 2023. In the United States,
inflation was projected to moderate to
3.0 per cent in 2024 from 4.1 per cent in
2023, driven mainly by declining core
inflation and the impact of monetary
policy tightening. In the Euro Area,
inflation was estimated to slow to 2.4 per
cent in 2024, from 5.4 per cent in 2023,
due to declining energy prices and
easing supply chain constraints. In the
United Kingdom, inflation was projected
to moderate to 2.6 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 estimated at 2.2 per cent in 2024,
down from 3.3 per cent in 2023, driven by
declining prices of various services,
including
education
and
communication, amongst others.

In the Emerging Markets and Developing
Economies, inflation moderated to 7.8
per cent in 2024 from 8.1 per cent in
2023. In China, inflation was projected to
increase to 0.4 per cent in 2024 from 0.2
per cent in 2023, driven by increased
stimulus to bolster the recovery. In India,
inflation was estimated to moderate to
4.4 per cent in 2024 from 5.4 per cent in
2023 due to a decline in energy prices
2018 2019 2020 2021 2022 2023 2024 2025 2026
World

Aes

EMDEs 4.66 3.61 -1.77 6.88 4.1


World
Aes
EMDEs
Estimate
Forecast


CBN Monetary Policy Review

and base effect from the previous year.
Russian
inflation
was
projected
to
accelerate to 7.9 per cent in 2024 from
5.9 per cent in 2023, due to increased
demand and weakening productive
capacity.
In
Brazil,
inflation
was
estimated to moderate to 4.3 per cent in
2024 from 4.6 per cent in 2023, due to a
slowdown in transportation and housing
utilities.

In Sub-Saharan Africa, headline inflation
was expected to increase to 18.1 per
cent in 2024 from 17.6 per cent in 2023,
as inflation remained elevated in some
key economies in the group. In Nigeria,
inflation was estimated to rise to 32.5 per
cent in 2024 from 24.7 per cent in 2023.
The rise in inflation is expected to be
driven by the continued increases in
energy and food prices as well as the
depreciation of the currency. Food
inflation has remained a major concern,
with staple prices such as rice and bread
rising significantly. In Ghana, however,
the IMF has projected inflation to
decelerate to 19.5 per cent in 2024 from
39.2 per cent in 2023, driven by a
combination of fiscal consolidation and
exchange rate management. Inflation
in South Africa was projected to trend
downwards to 4.7 per cent in 2024 from
5.9 per cent in 2023, although high
energy and transportation costs remain
a challenge.


Figure 2.2
Global Inflation (2018 - 2026)

Source: IMF Database (2024)

2.3
Global
Financial
Market
Developments
Global financial conditions in the
second half of 2024 were influenced by
a combination of factors, including
policy uncertainty, inflationary pressures,
and escalating geopolitical tensions. This
fuelled
market
volatility,
pushing
investors to seek safe-haven assets such
as gold. Financial markets experienced
notable
selloffs,
characterised
by
fluctuating stock prices and elevated
treasury
yields,
thus
deepening
uncertainty
in
global
markets.
Consequently, central banks continued
to grapple with the challenge of
balancing
inflation
control
and
sustaining economic growth.


2018 2019 2020 2021 2022 2023 2024 2025 2026
World


Aes


EMDEs


7.7
5.5
4.6

World
Aes
EMDEs
Estimate
Forecast


CBN Monetary Policy Review

2.3.1 Money Market and Central Bank
Policy Rates
In the second half of 2024, central
banks across advanced and emerging
economies
began
to
lower
their
monetary policy rates in response to the
steady decline in inflation. Most of these
central banks opted for a cautious
adjustment to policy as they assess the
unfolding uncertainties across the global
economy. Among the thirteen (13)
central banks surveyed in the review
period, nine (9) reduced their policy
rates, while four (4) increased.

In
the
Advanced
Economies,
the
European Central Bank (ECB) lowered its
policy rate by 75 basis points and
provided guidance for further easing as
disinflation progresses. The U.S. Fed and
the Bank of England also lowered their
policy rates by 100 and 50 basis points,
respectively. The Bank of Japan (BoJ),
however, maintained its policy rate to
prop up demand and support growth.

In the Emerging Market and Developing
Economies
(EMDEs)
central
bank
response varied, reflecting countryspecific challenges. Accordingly, the
Central Bank of Nigeria, the Central
Bank of Russia, and the Central Bank of
Brazil raised their policy rates by 75, 300,
and 175 basis points, respectively.
Conversely, the People’s Bank of China,
Reserve Bank of India, South African
Reserve Bank, Bank of Ghana, and
Central Bank of Kenya lowered their
policy rates by 40, 50, 50, 250, and 175
basis points, respectively. The Central
Bank of Egypt, however, kept its policy
rate throughout the review period as
inflationary pressure moderated


CBN Monetary Policy Review

Table 2.1: Policy Rates of Selected Countries January 2024 – December 2024
Country
Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Egypt
19.25 21.25 27.25 27.25 27.25 27.25 27.25 27.25 27.25 27.25 27.25 27.25
Kenya
13.5

13 12.75 12.75 12.75

S. Africa


7.75
Ghana

29.5

Nigeria
18.75 22.75 24.75 24.75 26.25 26.25 26.75 26.75 27.25 27.25
27.5
27.5
USA

Euro
Area


UK


4.75
4.75
Japan

China

India


Brazil

Russia

Source: cbrates.com
2.3.2 Global Capital Markets
Major global stock markets during the
review
period
delivered
mixed
performance, reflecting the monetary
policy stance of various central banks.
Some major markets recorded bullish
performance,
reflecting
improving
investor confidence as inflation rates
moderate.
However,
the
persistent
hawkish stance of other central banks to
address inflationary concerns led to a
portfolio rebalancing in favour of more
attractive fixed-income securities.
In Europe, the UK FTSE 100 and the
German DAX indices increased by 0.1
per cent and 9.2 per cent, respectively,
during the review period. Conversely,
France’s CAC 40 index decreased by 1.3
per cent within the same period. In North
America, the United States S&P 500 and
Canadian S&P/TSX Composite indices
increased by 7.3 per cent and 13.0 per
cent, respectively, while the Mexican
Bolsa index declined by 5.6 per cent.

In South America, the Argentine Merval
index increased by 57.3 per cent.
However, the Brazilian Bovespa stock
index
and
Colombian
COLCAP
decreased by 2.9 per cent and 0.1 per
cent, respectively, during the review
period.

In Asia, the Japanese Nikkei 225 and the
Chinese Shanghai SE index increased by
0.8 per cent and 12.9 per cent,


CBN Monetary Policy Review

respectively. Conversely, the Indian BSE
Sensex index decreased marginally by
1.1 per cent.

In
Africa,
all
Indexes
experienced
increases,
the
highest
being
the
Ghanaian GSE All-Share (27.6 per cent),
followed by the Kenyan Nairobi NSE20
Share Index (21.4 per cent). Egypt’s EGX
Case 30, South African JSE All-Share and
Nigerian NGX All-Share increased by 7.1,
5.5 and 2.9 per cent, respectively, during
the review period.

Table 2.2
Selected International Stock Market Indices as at December 31, 2024
Data Source: Bloomberg

Country
Index
29-Dec-23
28-Jun-24
31-Dec-24
Dec 29, 2023 - Dec
31, 2024 % Change
Jun 28, 2024 - Dec 31,
2024 % Change
AFRICA
Nigeria
NSE All-Share Index
74,773.77
100,057.49
102,926.40

37.7
2.9
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 A

India
BSE Sensex

Selected International Stock Market Indices as at December 31, 2024


CBN Monetary Policy Review

2.3.3 Bond Market and Sovereign Yields
In the second half of 2024, 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 higher macroeconomic
and credit risk associated with a security,
while a negative yield spread reflects
diminished perception of risk. Therefore,
the higher the yield spread, the higher
the associated sovereign risk premium,
and vice versa.

During the review period, sovereign
bonds of Ghana (1,583 bps), Colombia
(641 bps), Nigeria (468 bps), Brazil (223
bps), and Mexico (164 bps) recorded
positive yield spreads relative to U.S.
Treasuries,
suggesting
that
investors
demanded higher compensation to
holding
these
securities.
Ghana’s
exceptionally high spread underscored
its distressed debt position and fragile
fiscal
environment.
Colombia
and
Nigeria’s
wide
spreads
reflected
elevated
fiscal
and
external
vulnerabilities, while Brazil and Mexico,
though relatively more stable, continued
to
face
inflationary
pressures
and
currency
risk
that
sustained
their
premiums.

Conversely, sovereign bonds of Canada
(-85 bps), France (-105 bps), Germany (-
185 bps), Greece (-62 bps), Italy (-28
bps), Portugal (-113 bps), Spain (-93 bps),
the UK (-18 bps), China (-215 bps), and
Japan (-331 bps) recorded negative
spreads compared to U.S. Treasuries.
These
negative
spreads
highlight
investor confidence in these economies’
creditworthiness and policy frameworks.
The
deepest
negative
spreads
in
Germany,
China,
and
Japan
are
consistent with structurally low domestic
yields and safe-haven demand, while
Southern European countries such as
Italy, Spain, Portugal, and Greece
benefited from European Central Bank
support
that
reduced
perceived
sovereign
risk
despite
higher
debt
burdens.

Therefore, global investor sentiment in
2024 reflected heightened risk aversion
toward
emerging
markets,
while
advanced economies continued to
benefit from safe haven flows and
credible policy anchors.


CBN Monetary Policy Review

Table 2.3:
Sovereign Yields Spreads (Benchmark 10-Year Government Bonds) on December 31, 2024
Country
June 28,
2024 Yield
(%)
December
31, 2024
Yield (%)
Change in
Yield (Basis
Points)
December 31, 2024
Spread over the U.S.
(Basis points)
AFRICA
Nigeria (U.S.
$)

Ghana (U.S.
$)


NORTH AMERICA
Canada

Mexico

US
4.40
4.57
17.50

SOUTH AMERICA
Brazil

Columbia


EUROPE
France

Germany

Greece

Italy

Portugal

Spain

UK


ASIA
China

Japan


2.3.4 Global Commodity Prices
Commodity
price
indices
surveyed
during the review period showed a
mixed trend amid growing economic
uncertainties
and
deepening
geopolitical tensions worldwide. The
ongoing
war
between
Israel
and
Palestine, as well as Russia and Ukraine,
has resulted in continued supply chain
disruptions.
In
addition,
increased
uncertainties about the outcome of the
U.S. election sent negative shock waves
through the global commodity market.
The IMF primary commodity price index
slowed to 166.63 points at the end of


CBN Monetary Policy Review

December 2024 from 166.74 points at
the end of June 2024. This was driven by
a slowdown in sub-indices of agricultural
raw materials, base metals, all metals
excluding gold, fertiliser, and crude oil to
160.14, 182.08, 178.18, 147.90, and 177.43
at the end of December 2024 from
163.91, 187.82, 183.11, 163.45, and 200.57
at the end of June 2024, respectively.

The Food and Agriculture Organization
(FAO) Food Price Index rose to 127.4
points at the end of December 2024
from 121.0 points at the end of June
2024. The sub-indices of meat, dairy, and
vegetable oil rose to 119.6, 141.9, and
162.1 points at the end of December
2024 from 118.1, 127.9, and 131.8 points
at the end of June 2024, respectively.
Conversely, the sub-indices of cereals
and sugar declined to 111.4 and 119.3
points at the end of December 2024
from 115.2 and 119.4 points at the end of
June 2024, respectively.

The performance of the oil sector,
however, weakened,
reflecting the
impact of high economic uncertainty on
global demand. As a result, the average
price of the OPEC Reference Basket
declined to US$70.72 per barrel at the
end of December 2024 from US$83.64
per barrel at the end of June 2024.

2.3.5 Global Foreign Exchange Market
In the second half of 2024, currencies of
several countries depreciated against
the US dollar (Table 2.4). This was driven
by slow global growth, macroeconomic
uncertainties, and ongoing geopolitical
tensions amidst declining global trade.
In North America, the Canadian dollar
and
the
Mexican
peso
both
depreciated by 4.86 and 12.05 per cent,
respectively. In South America, the
Brazilian real, Argentinian peso and
Colombian peso depreciated by 9.40,
11.60 and 5.97 per cent, respectively. In
Europe, the British pound, euro, and
Russian ruble all depreciated against the
dollar by 1.25, 4.12 and 24.27 per cent,
respectively. In Asia, the Japanese yen,
Chinese yuan and the Indian rupee all
depreciated by 10.30, 2.74 and 2.80 per
cent, respectively.

In Africa, the Nigerian naira depreciated
by 4.24 per cent against the US dollar
(NFEM segment). Similarly, the South
African rand and the Egyptian pound
depreciated by 3.50 and 5.53 per cent,
respectively. However, the Ghanaian
cedi
and
the
Kenyan
shilling
appreciated against the US Dollar by
0.03 and 3.88 per cent, respectively, in
the review period.


CBN Monetary Policy Review

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


Currency
29/12/2023
28/06/2024
31/12/2024 PTP* % App/De YoY % App/Dep
AFRICA

2&3
1&3
Nigeria
Official
899.89

1,470.69
1,535.82

(4.24)

(41.41)

South Africa
Rand
18.30

18.19
18.85

(3.50)

(2.92)

Kenya
Shilling
156.66

129.33
129.29

0.03

21.17

Egypt
Pound
30.91

48.03
50.84

(5.53)

(39.20)

Ghana
Cedi
11.95

15.27
14.70

3.88

(18.71)

NORTH AMERICA
Canada
Dollar
1.33

1.37
1.44

(4.86)

(7.64)

Mexico
Peso
16.97

18.32
20.83

(12.05)

(18.53)

SOUTH AMERICA
Brazil
Real
4.85

5.59
6.17

(9.40)

(21.39)

Argentina
Peso
808.50

911.42
1,030.99

(11.60)

(21.58)

Colombia
Peso
3,875.07

4,143.85
4,406.92

(5.97)

(12.07)

EUROPE

UK
Pound
0.79

0.79
0.80

(1.25)

(1.25)

Euro Area
Euro
0.91

0.93
0.97

(4.12)

(6.19)

Russia
Ruble
90.00

85.99
113.55

(24.27)

(20.74)

ASIA
Japan
Yen
141.03

160.89
157.22

2.33

(10.30)

China
Renminbi
7.10

7.27
7.30

(0.41)

(2.74)

India
Rupee
83.21

83.38
85.61

(2.60)

(2.80)

PTP= Period to Period
YTD = Year to Date
Source: Bloomberg


CBN Monetary Policy Review

CHAPTER THREE
DOMESTIC ECONOMIC
DEVELOPMENTS

3.1 Output Growth
rowth in the Nigerian economy
improved in the second half of
2024, reflecting the impact of
ongoing monetary and fiscal reforms.
The oil and non-oil sectors, particularly
the agricultural and services sub-sectors,
remained the main contributors to
growth.

Data from the National Bureau of
Statistics (NBS) showed that real GDP
grew by 3.46 per cent (year-on-year) in
the third quarter of 2024, compared with
2.54 per cent and 3.19 per cent in the
corresponding quarter of 2023 and the
preceding quarter of 2024, respectively.
The non-oil sector grew by 3.37 per cent
in the third quarter of 2024 from 2.75 per
cent in the corresponding quarter of
2023 and 2.80 per cent in the preceding
quarter. The key drivers of growth in the
non-oil sector were Services (5.19%) and
Industry
(2.18%).
Consequently,
the
contribution of the non-oil sector to real
GDP was 94.43 per cent in the third
quarter of 2024 compared with 94.52 per
cent
and
94.30
per
cent
in
the
corresponding and preceding quarters,
respectively.

The oil sector grew by 5.17 per cent in
the third quarter of 2024, compared with
10.15 per cent in the preceding quarter
and a contraction of 0.85 per cent in the
corresponding period of 2023. Growth in
the
sector
was
largely
driven
by
improvement in oil production to 1.47
mbpd in the third quarter of 2024 from
1.45
and
1.41
mbpd
in
the
corresponding and preceding quarters,
respectively.
In
addition,
improved
investment in the downstream sector led
to the resumption of domestic refining
activities.

In the fourth quarter of 2024, real GDP
grew by 3.84 per cent, higher than 3.46
per cent, apiece, in the corresponding
and preceding quarters. This was driven
by the non-oil sector, which grew by 3.96
per cent in the fourth quarter of 2024,
compared with 3.07 and 3.37 per cent in
the
corresponding
and
preceding
quarters,
respectively.
The
services
sector, which grew by 5.37 per cent, was
the key driver of growth in the non-oil
sector. Accordingly, the contribution of
the non-oil sector to overall GDP
increased to 95.40 per cent in Q4 2024
from 95.30 and 94.43 per cent in the
corresponding and preceding quarters,
respectively.

The oil sector grew moderately by 1.48
per cent in the fourth quarter of 2024,
compared with 12.11 and 5.17 per cent
in the corresponding and preceding
quarters, respectively. Key factors that
impacted growth in the sector during
the review period include the relative
decline in daily average oil production
to 1.54 million barrels per day (mbpd)
from 1.56 mbpd in the corresponding
period of 2023. This, however, represents
an increase from the 1.47 mbpd
production in the preceding quarter.
Production in the sector was impacted
by ageing infrastructure and pipeline
vandalism incidents.

G


CBN Monetary Policy Review

Figure 3.1
Gross Domestic Product Growth Rate (2022Q1 –
2024Q4)

Source: National Bureau of Statistics (NBS)

3.1.1 DOMESTIC ECONOMIC ACTIVITIES
In the second half of 2024, real GDP
growth was driven by activities in both
the non-oil and oil sectors. The non-oil
sector grew by 3.37 per cent in the third
quarter of 2024, compared with 2.75 and
2.80 per cent in the corresponding and
preceding quarters, respectively. The
sub-sectors that drove non-oil growth
include Finance & Insurance (30.83%);
Transportation
&
Storage
(12.15%);
Water Supply & Waste Management
(9.78%); Information & Communication
(5.92%);
Arts,
Entertainment
&
Recreation
(4.74%);
and
Accommodation
&
Food
Services
(4.44%), compared with their respective
growth rates of 28.21, -35.85, 11.93, 6.69,
4.45
and
3.57
per
cent
in
the
corresponding period and 28.79, -13.53,
8.20, 4.44, 1.79 and 2.13 per cent in the
preceding quarter.

Output in the oil sector increased by 5.17
per cent in the third quarter of 2024,
compared with -0.85 and 10.15 per cent
in the corresponding and preceding
quarters, respectively. Average daily oil
production improved to 1.47 mbpd in
the third quarter of 2024, up from 1.45
and 1.41 mbpd in the corresponding
and preceding quarters, respectively,
resulting from improved security in oilproducing regions. Drilling of crude oil,
however, moderated as the rig count
decreased to 14 in the third quarter of
2024 from 15 in the preceding quarter.
Crude oil production, in the review
period, was below the Organisation of
the
Petroleum
Exporting
Countries
(OPEC) quota of 1.58 mbpd, due to
intermittent production shut-ins resulting
from
ageing
infrastructure
and
insufficient investment in the industry.

In the fourth quarter of 2024, growth in
the non-oil sector increased to 3.96 per
cent from 3.07 and 3.37 per cent in the
corresponding and preceding quarters,
respectively. The sub-sectors that drove
non-oil
growth
were
financial
&
insurance (27.78%); Mining & Quarrying
(2.23%);
Transportation
&
Storage
(18.61%);
Water
Supply
&
Waste
Management (8.95%); and Information
&
Communication
(5.90%).
These
compared with their respective growth
rates of 29.78, 8.04, -29.00, 7.44, and 6.33
per cent in the corresponding quarter
and 30.83, 3.27, 12.15, 9.78, and 5.92 per
cent in the preceding quarter.

The oil sector also recorded moderate
growth of 1.48 per cent in the fourth
quarter of 2024, compared with -0.85 per
cent
and
5.17
per
cent
in
the
corresponding and preceding quarters,
respectively.
Average
daily
oil
production stood at 1.54 mbpd in the
fourth quarter of 2024 compared with
1.56 mbpd in the fourth quarter of 2023
and 1.47 mbpd in the preceding
quarter. Oil production during the review


CBN Monetary Policy Review

period
was
below
the
budgetary
benchmark of 1.78 mbpd due to legacy
issues.
Including
aged
oil-sector
infrastructure.

Figure 3.2
Non-oil Sector Performance (2023Q1 – 2024Q4)

Source: NBS

Figure 3.3
Oil Sector Performance (2023Q1 – 2024Q4)

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 third quarter of 2024, growth in
the agricultural sector moderated to
1.14 per cent from 1.30 and 1.41 per cent
in the corresponding and preceding
quarters, respectively. The moderation
was driven largely by crop production,
which slowed to 1.18 per cent in the third
quarter of 2024, from 1.35 and 1.65 per
cent
in
the
corresponding
and
preceding quarters, respectively. This
was
followed
by
forestry,
which
moderated to 2.23 per cent, compared
with 2.77 per cent in the preceding
quarter.
It
was,
however,
an
improvement compared with 2.21 per
cent in the corresponding quarter.
Livestock grew by 1.03 per cent in Q3
2024, compared with 1.18 and -1.71 per
cent
in
the
corresponding
and
preceding quarters, respectively. The
share of agriculture in overall GDP rose
to 28.65 per cent in the third quarter of
2024 from 22.61 per cent in the
preceding
quarter
but
moderated
compared with 29.31 per cent in the
corresponding quarter.

In the fourth quarter of 2024, the
agricultural sector grew by 1.76 per cent,
compared with 2.10 and 1.14 per cent in
the
corresponding
and
preceding
quarters, respectively. This performance
was largely driven by crop production,
which grew by 1.90 per cent compared
with 2.44 per cent and 1.18 per cent in
the
corresponding
and
preceding

Agriculture
Industry
Services


CBN Monetary Policy Review

quarters, respectively. The share of
agriculture in overall GDP declined to
25.59 per cent in the fourth quarter of
2024 compared with 26.11 per cent and
28.65 per cent in the corresponding and
preceding quarters, respectively.

Figure 3.4
Sub-Components of Agricultural Sector Growth
(2023Q3 – 2024Q4)

Source: Statistics Department, CBN

3.1.2.1.1
Agricultural
Policies
and
Institutional Support1
Under the agricultural policy support,
total recovery in the second half of 2024
was ₦43.32 billion, compared with
₦131.45 billion in the first half of 2024, with
no
disbursements.
Cumulative
outstanding loans stood at ₦362.43
billion, compared with ₦373.15 billion in
the preceding period.

Specifically, a total of 24,145 loans
valued at ₦6.67 billion were guaranteed
under the Agricultural Credit Guarantee
Scheme Fund (ACGSF) in the second
half of 2024, compared with 11,082 loans
valued at ₦3.77 billion in the preceding
period.

A total of 8,096 loans valued at ₦2.59
billion were fully repaid during the
period, compared with 16,771 repaid
loans valued at ₦3.88 billion between
January and June 2024. The total
number of fully repaid loans in 2024
stood at 24,867, valued at ₦6.47 billion.

Details of the intervention schemes
under the Agricultural Policy Support are
provided in Table 3.1.1.


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

Q3-2023 Q4-2023 Q1-2024 Q2-2024 Q3-2024 Q4-2024
Crop Production
Livestock


CBN Monetary Policy Review

Table 3.1.1: Monetary Interventions in the Agriculture Sector
Source: CBN Development Finance Department

3.1.2.2 Industry
The industry sector grew by 2.18 per
cent in the third quarter of 2024,
compared with 0.46 and 3.53 per cent in
the
corresponding
and
preceding
quarters,
respectively.
The
sectoral
performance was largely driven by
mining
&
quarrying
(3.27%)
and
manufacturing (0.92%). These compare
with -1.96 and 0.48 per cent in the
corresponding quarter of 2023, and 7.79
and 1.28 per cent in the preceding
quarter, respectively. The construction
and water supply sub-sectors also grew
by 2.91 and 9.78 per cent in the third
quarter of 2024, compared with 3.89 and
11.93 per cent in the corresponding
period, and 1.05 and 8.20 per cent in the
preceding quarter, respectively. The
share of the industry sector in real GDP
moderated to 17.77 per cent compared
with 18.00 and 18.62 per cent in the
corresponding and preceding quarters,
respectively.


CBN Monetary Policy Review

In the fourth quarter of 2024, growth in
the industry sector moderated to 2.00
per cent, compared with 3.86 and 2.18
per cent in the corresponding and
preceding quarters, respectively. The
key drivers included mining & quarrying
(2.23%)
and
water
supply
(8.95%),
compared with 8.04 per cent and 7.44
per cent in the corresponding quarter
and 3.27 per cent and 9.78 per cent in
the preceding quarter, respectively. The
share of industry in overall GDP declined
to 17.03 per cent compared with 17.34
and 17.77 per cent in the corresponding
and preceding quarters, respectively.

Figure 3.5:
Sub-Components of Industry Sector Growth
(2023Q3-2024Q4)

3.1.2.2.1
Industry
Policies
and
Institutional Support
In
the
review
period,
the
Bank
continued to wind down its interventions
in the MSME segment. Total recoveries in
the review period decreased to ₦7.46
billion from ₦8.63 billion, while no
disbursements were recorded. Details of
schemes under the MSME and Industrial
Policy Support are provided in Table
3.1.2.


Source: NBS


Q3-2023
Q4-2023
Q1-2024
Q2-2024
Q3-2024
Q4-2024
MINING AND QUARRYING
MANUFACTURING
ELECTRICITY & GAS
WATER SUPPLY
CONSTRUCTION


CBN Monetary Policy Review

Table 3.1.2: Monetary Interventions under the MSME and Industrial Policy Support
Source: CBN Development Finance Department
3.1.2.2.2
Export Policies
The Export Policy Support comprises
interventions and other programmes
adopted by the Bank to support the
export value chain. Total recoveries in
the review period decreased to ₦5.48
billion from ₦26.58 billion, while no
disbursements were made. Details of the
schemes under the Export Policy Support
are provided in Table 3.1.3

Table 3.1.3: Monetary Interventions in Schemes under Export Policy Support
Source: CBN Development Finance Department


CBN Monetary Policy Review

3.1.2.2.3
Energy Policy Support
The Energy policy support comprises
interventions and other programmes
adopted by the Bank to support the
energy sector. Total recoveries in the
second half of 2024 increased to ₦53.78
billion
from
₦46.29
billion
in
the
preceding half year. Due to preapproved disbursements to the power
sector, disbursements in the period
increased to ₦43.54 billion from ₦15.58
billion in the preceding 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


3.1.2.2.4
Real
Sector
Policy
Support
In the Real Sector Policy Support,
total recoveries in the second half of
2024 increased to ₦237.54 billion from
₦149.91 billion, while no disbursement
(Table 3.1.5).


CBN Monetary Policy Review

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 third quarter of 2024, the services
sector grew by 5.19 per cent compared
with 3.99 and 3.79 per cent in the
corresponding and preceding quarters,
respectively. Growth in the sector was
driven by Financial & Insurance (30.83%),
Transportation & Storage (12.15%), and
Information & Communication (5.92%).
These compare with 28.21, -35.85, and
6.69 per cent in the corresponding
quarter of 2023 and 28.79, 13.53, and
4.44 per cent in the preceding period.
The share of services in real GDP stood at
53.58 per cent in the third quarter of 2024
from 52.70 and 58.76 per cent in the
corresponding and preceding quarters,
respectively.
Growth in the Services sector in the
fourth quarter of 2024 rose to 5.37 per
cent from 3.98 and 5.19 per cent in the
corresponding and preceding quarters,
respectively. The expansion was driven
by Financial and Insurance (30.83%),
Transportation and Storage (18.61%),
and
Information
&
Communication
(5.90%). These compare with 29.78, -
29.00,
and
6.33
per
cent
in
the
corresponding quarter of 2023 and
30.83, 12.15, and 5.92 per cent in the
preceding
quarter,
respectively.
Accordingly, the share of Services in
overall GDP rose to 57.38 per cent in the
review period, compared with 56.55 and
53.58 per cent in the corresponding and
preceding quarters, respectively.


CBN Monetary Policy Review

Figure 3.6
Sub-Components of Services Sector Growth (Q1
2023 - Q4 2024)

Source: Statistics Department, CBN

3.1.4.1 Oil Sector
In the second half of 2024, the oil sector
performance
improved
despite
persistent structural challenges including
pipeline vandalism, crude oil theft,
ageing infrastructure, and divestment
from the sector.

Domestic oil production in the third
quarter of 2024 rose to 1.47 mbpd
compared with 1.45 and 1.41 mbpd in
the
corresponding
and
preceding
quarters, respectively. This resulted from
enhanced security measures aimed at
curbing pipeline vandalism and oil theft.
In the fourth quarter of 2024, domestic oil
production
stood
at
1.54
mbpd
compared with 1.56 and 1.47 mbpd in
the
corresponding
and
preceding
quarters, respectively.

Oil prices declined during the review
period, largely driven by heightened
global uncertainties surrounding the

U.S.
presidential
election.
Accordingly, the price of Nigeria’s
reference crude, the Bonny Light 370API,
declined to US$70.72 per barrel at the
end of December 2024 from US$79.12
per barrel at the end of December 2023
and US$83.64 per barrel at the end of
June 2024.

Figure 3.7
Quarterly Domestic Oil Production (2022Q22024Q4)

Source: NBS


Q1-2023Q2-2023Q3-2023Q4-2023Q1-2024Q2-2024Q3-2024Q4-2024
Administrative and Support Services
Arts, Entertainment & Recreation
Human Health & Social Services
Other Services
Accomadation and Food Services
Education
Public Administration
Real Estate
Professional, Scientific & Technical Serv.
Trade
Transportation and Storage


Q2 2022
Q3 2022
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Q2 2024
Q3 2024
Q4 2024
Million Barrels per day


CBN Monetary Policy Review

Figure 3.8
Monthly Bonny Light Oil Price, January -
December 2024

Source: Statistics Department, CBN

3.2 Domestic Price Developments
Inflationary pressure persisted in the
second half of 2024, with all three
measures of inflation, headline, food,
and core, trending upwards. Price
development was generally driven by
both supply- and demand-side factors,
including
food
supply
shortages
associated with high insecurity in foodproducing areas, disruption in both the
global and domestic supply chains, and
exchange rate pressures.

On the supply-side, high-energy costs
and continued insecurity in farming
communities were the predominant
drivers of price development. Others
include poor infrastructure and adverse
weather
conditions
resulting
from
climate change, the combined impact
of which puts upward pressure on the
general price level.

Figure 3.9
Headline, Core, and Food Inflation Rates (July –
December 2024)
Source: NBS

On
the
demand
side,
there
was
increased
liquidity
from
Federation
Account Allocation Committee (FAAC)
disbursements and maturing obligations,
which resulted in increased demand
pressures. The Bank, however, managed
credit
growth
through
its
liquidity
management instruments by raising the
Cash Reserve Requirement (CRR) in the
review period.

3.2.1
Trends in Inflation
Headline, core and food measures of
the consumer price index (CPI) trended
upwards to 867.8, 655.2, and 1,105.5 in
December 2024, compared with 767.4,
590.1,
and
966.8
index
points,
respectively, in July 2024. Headline
inflation (year-on-year) increased to
34.80 per cent in December 2024 from
33.40 per cent in July. Similarly, core
inflation rose to 29.28 per cent in
December 2024 from 27.47 per cent in
July.
Food
inflation
also
rose
in
December 2024 to 39.84 per cent from
39.53 per cent in July 2024. The prices of
food
and
non-alcoholic
beverages


Dec-23
Jan-24
Feb-24
Mar-24
Apr-24
May-24
Jun-24
Jul-24
Aug-24
Sep-24
Oct-24
Nov-24
Dec-24
Bonny Light


CBN Monetary Policy Review

were the major drivers of headline
inflation during the review period (Table
3.2 and Figure 3.9).


Table 3.2: Inflation Rate (July – December 2024)
Month
Headline
Core
Food

CPI
YoY
12MMA
CPI
YoY
12MMA
CPI
YoY
12MMA
July

August

September

October

November

December

Source: NBS

3.2.1
Headline Inflation
The major components of headline
inflation (year-on-year) increased during
the second half of 2024. The key driver
was
Food
and
Non-Alcoholic
Beverages, which increased to 25.08 per
cent in December 2024 from 24.37 per
cent in July 2024. Similarly, Transportation
increased to 1.77 per cent from 1.45 per
cent between July and December 2024.
Clothing & Footwear and Education also
increased to 1.26 per cent and 0.61 per
cent in December 2024 from 1.11 per
cent and 0.50 per cent in July 2024,
respectively. Other components, such as
Furnishings, Household Equipment &
Household Maintenance, Miscellaneous
Goods & Services, and Restaurant &
Hotels recorded mild increases in the
period.

Table 3.3 Major Components of Headline Inflation (Y-on-Y), Jul. – Dec. 2024

Source: Statistics Department, CBN


Headline
Food &
NonAlcoholic
Bev.
Housing,
Water,
Elect.Gas
& Other
Fuel
Clothing
&
footwear
Transport
Furnishin
gs,
Househol
d Equip
&HH
Maint.
Education Health
Miscellan
eous
Goods &
Services
Restauran
t & Hotels
Alcoholic
Bev.
Tobacco
& Kola
Recreatio
n &
culture
Communica
tion
Jul-24

Aug-24

Sept-24

Oct-24

Nov-24

Dec-24

Change


CBN Monetary Policy Review

Figure 3.10: Major Components of Headline Inflation (Y-on-Y), Jul. – Dec. 2024

Source: Statistics Department, CBN

On a month-on-month basis, headline
inflation rose to 2.44 per cent in
December 2024 from 2.28 per cent in
July. The major driver of month-onmonth headline inflation was Food &
Non-Alcoholic Beverages, which rose to
1.73 per cent in December 2024 from
1.60 per cent in July. There were also mild
increases in the prices of Transport &
Housing, Water, Electricity, Gas & Other
Fuel (Table 3.4 and Figure 3.11).

Table 3.4: Major Components of Headline Inflation (M-on-M), Jul. – Dec. 2024

Source: Statistics Department, CBN

Figure 3.11: Major Components of Headline Inflation (M-on-M), Jul. – Dec. 2024

Source: Statistics Department, CBN


Date
Headline
Food &
NonAlcoholic
Bev.
Housing,
Water,
Elect.Gas
& Other
Fuel
Clothing
&
footwear
Transport
Furnishings,
Household
Equip &HH
Maint.
Education Health
Miscellaneo
us Goods &
Services
Restaurant
& Hotels
Alcoholic
Bev.
Tobacco &
Kola
Recreation
& culture
Communica
tion
Jul-24

Aug-24

Sept-24

Oct-24

Nov-24

Dec-24

Change

Jul-24
Aug-24
Sep-24
Oct-24
Nov-24
Dec-24
Headline
Food & Non-Alcoholic Bev.
Housing,Water, Elect.Gas &
Other Fuel
Clothing & footwear
Transport
Furnishings, Household Equip
&HH Maint.


CBN Monetary Policy Review

3.1.2
Food Inflation
Food
inflation
(year-on-year)
rose
marginally
to
39.84
per
cent
in
December 2024 from 39.53 per cent in
July, driven by farm produce which rose
to 21.48 per cent in December 2024 from
20.40 per cent in July. The increase in
farm produce inflation was accounted
for by rice local sold loose and rice agric
sold loose. Processed food inflation,
however, declined to 18.36 per cent in
December 2024 from 19.13 per cent in
July, due to decreases in the price of
maize paste, unsliced bread, yam flour
sold loose, and eko (agidi/kafa). The
general rise in food prices was attributed
to insufficient food supply, driven by
persisting security challenges in foodproducing areas; high costs of farm
inputs and transportation, and lingering
exchange rate pressures.
Table 3.5: Major Components of Food Inflation (Y-on-Y), Jul. – Dec. 2024

Source: Statistics Department, CBN

Figure 3.12: Major Components of Food Inflation (Y-on-Y), Jul. – Dec. 2024

Source: Statistics Department, CBN

Month-on-month
food
inflation
increased
to
2.66
per
cent
in
December 2024 from 2.47 per cent in
July. Processed food inflation rose to
1.78 per cent in December 2024 from
0.85 per cent in July. The key drivers of
the increase in processed food prices
were
Eko
(agidi);
Maize
Paste
(Akamu); unsliced bread and Yam
flour sold loose. Farm produce prices,
however, fell to 0.88 per cent in
December 2024 from 1.63 per cent in
July.

Date
FOOD
Processed
Food
Oil & Fats
BREAD
UNSLICE
D 500g
EKO(AGI
DI/KAFA)
MAIZE
PASTEWHITE(O
GI/AKAM
U)
YAM
FLOUR,S
OLD
LOOSE
Farm
Produce
Yam,
Potatoes
& other
tubers
MILLET
(JERO OR
MAIWA)
SOLD
LOOSE
RICE
AGRIC
SOLD
LOOSE
RICE
LOCAL
SOLD
LOOSE
Jul-24

Aug-24

Sept-24

Oct-24

Nov-24

Dec-24

Change


CBN Monetary Policy Review

Table 3.6: Major Components of Food Inflation (M-on-M), Jul. – Dec. 2024)

Source: Statistics Department, CBN

Figure 3.13: Major Components of Food Inflation (M-o-M), Jul. – Dec. 2024

Source: Statistics Department, CBN

3.1.3
Core Inflation
Core
inflation
(year-on-year),
(less
agricultural produce and energy), rose
to 29.28 per cent in December 2024, an
increase of 1.88 percentage points from
27.40 per cent in June 2024. Key drivers
of this increase are passenger transport
by
road,
accommodation
service,
hairdressing salons & personal grooming
establishments, and appliances, articles
and products for personal care. The
increase in core inflation reflects the
elevated demand that prevailed during
the end-of-year yuletide season. (Figure
3.14)


Figure 3.14
Core Inflation Trends in Per cent (Y-on-Y) January
– December 2024

Source: NBS

On a month-on-month basis, core
inflation increased by 0.18 percentage
point to 2.24 per cent in December 2024
from 2.06 per cent in June 2024. The
acceleration in monthly core inflation is
Date
FOOD
Processe
d Food
Oil & Fats
BREAD
UNSLICE
D 500g
EKO(AGI
DI/KAFA)
MAIZE
PASTEWHITE(O
GI/AKAM
U)
YAM
FLOUR,S
OLD
LOOSE
Farm
Produce
Yam,
Potatoes
& other
tubers
MILLET
(JERO OR
MAIWA)
SOLD
LOOSE
RICE
AGRIC
SOLD
LOOSE
RICE
LOCAL
SOLD
LOOSE
Jul-24

Aug-24

Sept-24

Oct-24

Nov-24

Dec-24

Change

Jan-24
Feb-24
Mar-24
Apr-24
May-24
Jun-24
Jul-24
Aug-24
Sep-24
Oct-24
Nov-24
Dec-24
Core Inflation (Y-o-Y)


CBN Monetary Policy Review

reflective of the increase in electricity
tariffs which are impacting households
and manufacturers (Figure 3.15).

Figure 3.15
Core Inflation Trends in Per cent (M-on-M)
January – December 2024

Source: NBS

3.2.3 Moderating Factors
The Bank sustained a tight monetary
policy stance to address inflationary
pressures and stabilise the exchange
rate in the review period. The Monetary
Policy Rate (MPR) was thus, increased by
a cumulative of 125 basis points in the
review period, from 26.25 per cent in July
to 27.50 per cent in November 2024. The
Cash
Reserve
Requirement
for
Commercial and Merchant banks was
also raised to 50.0 and 16.00 per cent in
November 2024 from 45.0 and 14.00 per
cent in July, respectively. In addition, the
Bank
conducted
Open
Market
Operations to manage system liquidity.
Government also initiated a 150-day
tariff-free import window for grains to
improve food supply and moderate
price pressures.

3.3
Monetary
Policy
and
Liquidity
Management
In the second half of 2024, the global
macroeconomic
environment
was
characterized by varying conditions.
Central banks globally took diverse
monetary policy decisions, reflecting
tailored responses to regional economic
indicators, including inflation trends,
growth
prospects,
and
external
economic pressures. In the latter half of
2024, however, central banks across the
advanced
and
emerging
market
economies shifted towards a looser
policy stance.

On the domestic scene, the CBN
maintained a tight policy stance driven
by
the
resurgence
of
inflationary
pressures in October 2024 following two
consecutive months of moderation. The
renewed pressure was attributed to the
increase in energy prices, the continuous
rise in Currency Outside Banks (COB),
exchange
rate
volatility,
and
an
increase in banking system liquidity.

3.3.1
Instruments
of
Liquidity
Management
The Bank continued to use its key policy
instruments,
complemented
by
macroprudential measures, to maintain
price and financial system stability
during the review period. The MPR was
the main instrument used for monetary
policy in the second half of 2024,
supported
by
the
Cash
Reserve
Requirement (CRR). Other instruments
deployed to manage banking system
liquidity
include:
Open
Market

Jan-24
Feb-24
Mar-24
Apr-24
May-24
Jun-24
Jul-24
Aug-24
Sep-24
Oct-24
Nov-24
Dec-24
Core Inflation (M-o-M)


CBN Monetary Policy Review

Operations (OMO), Discount Window
Operations, and the Liquidity Ratio (LR).

In the foreign exchange market, the
Bank continued implementing various
market reforms to achieve stability in the
exchange rate mechanism. Some of
these
reforms
include
the
operationalisation
of
the
Electronic
Foreign Exchange Matching System
(EFEMs) and the Foreign Exchange (FX)
Code.

3.3.1.1 Monetary Policy Rate (MPR)
In the period under review, the MPR
remained the main tool for signaling the
Bank’s
monetary
policy
stance.
Consequently, the MPR was increased
to 27.50 per cent in November 2024,
from 26.75 per cent in July, a cumulative
of 125 basis points. The Bank also
adjusted
the
asymmetric
corridor
around the MPR to +500/-100 basis points
in July 2024 up from +100/-300 basis
points in May 2024 and held it at this level
for the rest of the period.

3.3.1.2 Open Market Operations (OMO)
The Bank continued to use of Open
Market Operations (OMO) as its primary
instrument for liquidity management.
OMO
sales
in
the
review
period
increased to ₦8,259.15 billion from
₦725.00 billion in the corresponding
period and ₦6,092.58 billion in the
preceding half. This reflects the Bank’s
efforts to manage the high level of
banking system liquidity (Table 3.7).


Table 3.7
OMO Bills Auction (July – December 2024)
(N’Billion)
Date

Jan
-
878.61
Feb
-
-
Mar
-
856.30
Apr
-
676.65
May
-
1,918.86
Jun
-
1,762.16
1st Half
0.00
6,092.58
Jul
-
-
Aug
150.00
1,627.46
Sep
-
714.50
Oct
400.00
1,636.37
Nov
74.20
1,447.93
Dec
100.80
2,832.88
2nd Half
725.00
8,259.15
Cumulative
Figure
725.00
14,351.73
Source: CBN, Financial Market Department as at
March 10, 2025

Figure 3.16
OMO Bills Auction (Jul. – Dec. 2024)

Source: CBN, Financial Market Department as at
March 10, 2025


N'Billions
OMO Sales


CBN Monetary Policy Review

3.3.1.3 Reserve Requirements
The Cash Reserve Requirement (CRR)
for Deposit Money Banks (DMBs) was
increased by 500 basis points to 50.00
per cent from to 45.0 per cent in
September 2024, while the CRR for
Merchant Banks was also increased by
200 basis points to 16.00 per cent from
14.0 per cent. The hike in CRR was
intended to sterilise the excess liquidity
with
the
banking
system
towards
moderating
the
rising
inflationary
pressure. The Bank retained the Liquidity
Ratio (LR) at 30.0 per cent in the second
half of 2024.

3.3.1.4 Standing Facilities
In the review period, the standing
facilities window remained accessible to
banks to manage their closing liquidity
requirements.

Transactions at the Standing Lending
Facility (SLF) window in the second half
of 2024 showed an increase relative to
the
corresponding
and
preceding
periods. Demand at the SLF window
increased
by
24.52
per
cent
to
₦72,025.90 billion in the second half of
2024 from ₦57,844.35 billion in the first
half of
2024, compared with
the
corresponding period, it increased by
656.18 per cent from ₦9,524.94 billion.

At the Standing Deposit Facility (SDF)
window transactions also increased by
272.18 per cent to ₦30,077.21 billion in
the second half of 2024 from ₦8,081.39
billion in the preceding period of 2024
and by 192.37 per cent from ₦10,287.52
billion in the second half of 2023. The
high volume of transaction at the SDF
indicates existence of excess banking
system liquidity.

Overall, transactions at the Standing
Facilities window resulted in a net
lending position of ₦41,948.69 billion in
the second half of 2024 relative to
₦49,762.96 billion in the preceding
period and a net deposit position of
₦762.58 billion in the corresponding
period of 2023.

Table 3.8
CBN Standing Lending Facility (July – December
2024) (N’Billion)
Date

Per cent (y-o-y)
Jan
297.45
3,785.37

Feb
452.66
5,801.70

Mar
4,058.37
21,812.72

Apr
4,106.52
11,903.78

May
623.98
10,947.86

Jun
124.68
3,592.92

1st Half
9,663.67
57,844.35
500.62
Jul
747.23
16,835.96

Aug
1,585.41
3,160.22

Sep
3,531.75
7,956.03

Oct
70.81
16,943.40

Nov
2,308.44
10,572.69

Dec
1,281.31
16,557.61

2nd Half
9,524.94
72,025.90
656.24
Total
19,188.61
129,870.26

Source: CBN, Financial Market Department as at
March 10, 2025

Figure 3.17
Standing Lending Facility (July – December 2024)

Source: CBN, Financial Market Department as at
March 10, 2025
Jul Aug Sep Oct NovDec
₦ -
₦ 5,000.00
₦ 10,000.00
₦ 15,000.00
₦ 20,000.00
N'Billions
SLF


CBN Monetary Policy Review

Table 3.9
CBN Standing Deposit Facility (July – December
2024) (N’Billion)
Date

% Change
Jan
643.89
1,169.51
81.63%
Feb
853.46
329.82
-61.35%
Mar
434.91
195.71
-55.00%
Apr
224.29
465.11
107.37%
May
450.23
959.97
113.21%
Jun
621.88
4,961.27
697.78%
1st Half
3,228.65
8,081.39
150.30%
Jul
878.34
2,685.53
205.75%
Aug
804.52
7,913.89
883.68%
Sep
760.03
4,475.17
488.82%
Oct
3,011.30
3,006.35
-0.16%
Nov
2,801.70
4,115.51
46.89%
Dec
2,031.63
7,880.77
287.90%
2nd Half
10,287.52
30,077.21
1,912.88%
Total
13,516.17
38,158.61
1,914.38%
Source: CBN, Financial Market Department as of
March 10, 2025

Figure 3.18
Standing Deposit Facility (July – December, 2024)

Source: CBN, Financial Market Department as at
March 10, 2025

3.3.1.5 Foreign Exchange Management
In the second half of 2024, the Bank
continued its foreign exchange market
reforms targeted at ensuring a marketdetermined exchange rate, through the
adoption of a "willing buyer, willing seller"
model.

To ensure efficiency in the foreign
exchange market, several policies were
implemented, including the suspension
of direct Sales of FX to Eligible Bureau De
Change
(BDC)
Operators
and
redirection to Authorized Dealers. This
was aimed at meeting the demand for
invisible transactions, such as personal
travel allowances, medical expenses,
and
school
fees,
thus
providing
additional liquidity to the market. The
Bank temporarily reintroduced the Retail
Dutch Auction System (RDAS) to stabilize
the market before commencing with the
Electronic Foreign Exchange Matching
System (EFEMS). The EFEMS is a market
platform
where
willing
buyers
electronically identify willing sellers at an
agreed price to minimise arbitrage and
speculation. In addition, the Nigerian
Foreign
Exchange
(FX)
Code
was
introduced as a set of guidelines to
govern
the
conduct
of
market
participants. The guidelines included six
active
pillars
which
provided
an
encompassing framework to promote
the integrity and effective functioning of
the wholesale foreign exchange (FX)
market in Nigeria.

Total foreign exchange participation by
the CBN surged by 115.56 per cent to
$3,177.38 million in the second half of
2024 from $1,474.00 million in the
preceding
period.
Compared
with
$456.59 million in the corresponding
period, this is an increase of 328.86 per
cent.
Overall,
the
increased
participation by the CBN, in the review
period, reflects efforts by the Bank to
Jul Aug Sep Oct Nov Dec

N'Billion
SDF


CBN Monetary Policy Review

ensure stability in the foreign exchange
market (Table 3.10).

Table 3.10
Foreign Exchange Supply by the CBN (US$ Million)
Date

%
Change

Total
FX
Supply
(including
Forward
Sales)
Total
FX
Supply
(including
Forward
Sales)

Jan
1,343.78
-
-
Feb
1,078.44
443.00
-58.92
Mar
1,153.76
196.00
-83.01
Apr
1,078.44
162.00
-84.98
May
1,124.78
592.00
-47.37
Jun
557.54
81.00
-85.47
1st Half
6,336.74
1,474.00
-76.74%
Jul
158.00
377.17
138.72
Aug
298.59
866.36
190.15
Sep
-
542.00
-
Oct
-
407.00
-
Nov
-
453.90
-
Dec
-
530.95
-
2nd Half
456.59
3,177.38
328.86
Source: CBN, Financial Market Department as at
March 10, 2025

Figure 3.19
Total FX Supply by the CBN (July – December
2024)

Source: CBN, Financial Market Department as at
March 10, 2025

3.3.2
Developments
in
Monetary
Aggregates
Monetary aggregates grew in the
review period driven by a rise in foreign
currency
deposits
resulting
from
increased inflows from the monetisation
of oil proceeds and an expansionary
fiscal policy. The primary driver of the
growth in monetary aggregates was the
Net Foreign Asset (NFA), even though
Net
Domestic
Asset
(NDA)
also
increased marginally. The growth in NFA
in the review period was driven by
increased
Claims
on
Non-residents,
relative to liabilities to Non-residents. The
marginal growth in NDA was due to an
increase in credit to the private sector.

3.3.2.1 Broad Money (M3)
Broad money supply (M3) maintained
an upward trajectory in the review
period. It grew by 11.46 per cent to
₦113,093.24 billion at the end of the
second half of 2024 from ₦101,461.23
billion in the first half of 2024. Year-onYear, M3 grew by 42.70 per cent
compared with ₦79,252.46 billion at
end-December 2023, exceeding the
benchmark of 15.60 per cent for the
year. This substantial deviation of M3
from its target was largely driven by
258.08 per cent growth in NFA and 13.93
per cent growth in NDA at end-2024
relative to end-December 2023.


Jul
Aug
Sep
Oct
Nov
Dec

US$'Million
Total FX Supply
(including Forward Sales)


CBN Monetary Policy Review

Figure 3.20
Money Supply (M1) and (M3) (July – December
2024)

Source: CBN, Financial Market Department as of
March 10, 2025

Figure 3.21
Growth in Money Supply (M1) and (M3) (July –
December 2024)

Source: CBN, Financial Market Department as at
March 10, 2025

3.3.2.2
Narrow Money (M1)
Narrow Money (M1) increased by 4.85
per cent to ₦38,582.87 billion at the end
of December 2024 from ₦36,798.74
billion at the end-June 2024. Year-todate, M1 grew by 28.09 per cent
compared with ₦30,122.29 billion at
end-December 2023, exceeding the
annual indicative benchmark of 15.68
per cent. Currency Outside Banks grew
by 49.25 per cent, while Transferable
Deposits of the ODCs grew by 25.36 per
cent in the same period.

3.3.2.3 Net Foreign Assets (NFA)
During the review period, Net Foreign
Assets (NFA) increased by 44.81 per cent
to ₦33,438.98 billion at end-December
2024 from ₦23,090.88 billion in the
preceding period. Year-on-Year, NFA
grew by 258.08 per cent compared with
₦9,338.45 billion in the corresponding
period of 2023, exceeding the annual
indicative benchmark of 49.02 per cent.
The
year-on-year
Claims
on
Nonresidents grew by 78.88 per cent,
reflecting an increase in the value of
assets held abroad, while Liabilities to
Non-residents increased by 37.39 per
cent, indicating a rise in obligations to
foreign entities.

3.3.2.4 Net Domestic Assets (NDA)
Net Domestic Assets (NDA) grew by
1.64 per cent to ₦79,654.26 at endDecember 2024 from ₦78,370.35 billion
at end-June 2024. Year-on-Year, NDA
grew by 13.93 per cent relative to
₦69,914.01 billion in the corresponding
period of 2023, exceeding the annual
indicative benchmark of 11.80 per cent,
indicating an expansion in domestic
assets than initially projected.

Net Domestic Credit (NDC) grew by 3.85
per cent driven by Credit to the Private
Sector (CPS) which increased by 20.78
per cent, while Credit to Government
(Cg) contracted by 27.71 per cent. The
growth in NDC at end-December 2024
was
below
its
annual
indicative
benchmark of 19.97 per cent.

Jul-24 Aug-24 Sep-24 Oct-24 Nov-24 Dec-24
₦-
₦20,000.00
₦40,000.00
₦60,000.00
₦80,000.00
₦100,000.00
₦120,000.00
N''Billions

Growth
M3 Growth
M1 Growth


CBN Monetary Policy Review

Figure 3.22
Net Domestic Asset (NDA) (July – December 2024)

Source: CBN, Financial Market Department as at
March 10, 2025

Figure 3.23
NDA, NDC and Other Assets (Net) (July –
December 2024)

Source: CBN, Financial Market Department as of
March 10, 2025


3.3.2.5 Credit to the Government (Cg)
In
the
review
period,
Credit
to
Government (Cg) decreased marginally
by 1.34 per cent to ₦24,253.15 billion at
end-December 2024 from ₦23,932.58 at
end-June
2024.
This
represents
a
significant decrease of 27.71 per cent
from
₦33,574.60
billion
at
endDecember
2023.
The
year-on-year
decline of 27.71 per cent in Cg was
considerably lower than the annual
indicative benchmark of 14.99 per cent.
The contraction in Cg was largely due to
the Government’s affinity to raise funds
from the capital market.

3.3.2.6 Credit to the Private Sector (Cp)
Credit to the Private Sector (CPS) grew
marginally by 3.20 per cent to ₦75,532.73
billion at end-December 2024 from
₦73,191.95 billion at end-June 2024.
Year-to-date, CPS grew by 20.78 per
cent compared with ₦62,538.68 billion at
end-December 2023, below the annual
provisional indicative benchmark of
22.65 per cent. This growth was driven
largely by ODCs' credit to the core
private sector, which increased by
₦12.99 trillion to ₦61.80 trillion in the
review period.

Figure 3.24
Domestic Credit to Private Sector (July –
December 2024)

Source: CBN, Financial Market Department as of
March 10, 2025

3.3.2.7 Monetary Base (MB)
In the second half of 2024, Monetary
Base (MB) increased by ₦7.65 trillion to
₦32,672.83 billion at end-December
2024 from ₦25,023.19 billion at end-June

N''Billions
₦ -
₦ 20,000.00
₦ 40,000.00
₦ 60,000.00
₦ 80,000.00
₦ 100,000.00
₦ 120,000.00
₦ 140,000.00
N''Billions
Net Domestic Asset
Net Domestic Credit
Other Items Net
₦73,000.00
₦73,500.00
₦74,000.00
₦74,500.00
₦75,000.00
₦75,500.00
₦76,000.00
₦76,500.00
N''Billions


CBN Monetary Policy Review

2024. Year-on-Year, it grew by ₦7.94
trillion, compared with ₦24,735.52 billion
at end-December 2023, exceeding the

indicative
benchmark
of
₦28,274.79 billion. The growth was driven
by an increase of ₦6.00 trillion in the
Required Reserves of Other Depository
Corporations (ODCs) and ₦1.79 trillion in
Currency-in-Circulation (CiC) during the
review period.
The performance of MB in the review
period reflects the impact of the upward
adjustment of the CRR to 50.0 per cent
from 45.0 per cent.

A summary of the major monetary
aggregates
and
their
provisional
benchmarks as at end-December 2024
is presented in Table 3.11a.

Table 3.11a: The Performance of Monetary Aggregates and Their Implications
Source: Statistics Department, CBN

Table 3.11b: The Performance of Monetary Aggregates and their Implications
S/N
Monetary
Aggregates
Performance
Implication

Overall
Monetary
Aggregates
Mixed
outcome
There was a continuous expansion in broad and
narrow money supply in the economy in the second
half of 2024, which is similar to the performance of NFA,
NDA and MB. As such, the H2-2024 outcomes of M1,
M3 and NFA surpassed their respective annual
benchmarks. This further underscore the need for the
Management to continue to closely monitor the
demand and
supply drivers
of
the monetary
aggregates. Meanwhile, the significant growth in MB
reflects the increase in CRR from 45.50 per cent to
50.00 per cent in the review period. On the contrary,
aggregates such as NDC, NCG and CPs performed
Actual
Actual
Actual
Benchmark
H2
H1
H2

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

CBN Monetary Policy Review

below their annual benchmarks. Overall, it is to ensure
consistency of the Bank’s monetary policies on the
concerned monetary aggregates as a prerequisite for
an effective monetary targeting framework.

Broad Money
Supply (M3)
Above the
Annual
Target
Both M3 and M2 as at End-December 2024, performed
relatively above their annual benchmarks. Key drivers
of M3 growth were influenced by 258.08 per cent in
NFA and 13.93 per cent in NDA at end-2024 relative to
end-2023. Overall, the phase of the monetary policy
stance of the Bank in the review period, among other
measures in the fiscal space, are expected to
moderate money growth in the economy and
ultimately slow down inflationary pressure in the
subsequent periods

Narrow Money
(M1)
Above the
Annual
Target
Major drivers of M1 include an increase in currency
outside banks by 49.25 per cent and Transferable
Deposits of the ODCs by 25.36 per cent in the review
period. Notably is the contribution of COB to rising CIC
in the economy, especially in the review period. For
instance, COB constitutes about 94.20 per cent of the
CIC as at End-December 2024. This reflects an
increased demand for physical cash in the economy,
which could further suggest a surge in the number of
unbanked public and increased informal sector. The
observed increase in CIC poses potential threats to the
financial inclusion strategy of the Bank. Thus, it requires
urgent policy action to moderate the continuous
growth in CoB. Consequently, this strongly suggests the
need for Management to monitor the behaviour of
COB to stay within the optimal target

Net Foreign
Assets (NFA)
Significantly
Above the
Annual
Target
The overall increase in NFA was primarily driven by the
effects of exchange rate revaluation, causing a
considerable increase in the value of NFA in naira
terms, especially when compared with end-2023.
However, specifically, movements in NFA during the
second half of 2024 was not majorly driven by
exchange rate effects, but rather by other factors such
as offshore accounts reconciliation, among others.
Specifically, the year-to-date Claims on Non-residents
grew by 78.88 per cent, reflecting an increase in the
value of assets held abroad. Meanwhile, Liabilities to
Non-residents increased by 37.39 per cent, indicating
a rise in obligations to foreign entities.

Net Domestic
Assets (NDA)
Marginally
Above the
Annual
Target
Key drivers of NDA on a year-to-date basis at the end
of the second half of 2024 were primarily driven by
factors such as Other Items Net (OIN), which increased
by 36.72 per cent - a major driver of the overall
increase in NDA. similarly, Net Domestic Credit (NDC)
contributed to the growth in NDA, albeit at a marginal
rate of 3.85 per cent. The growth in NDA at endDecember 2024 exceeded the annual provisional
indicative benchmark of 11.80 per cent, indicating an
expansion in domestic assets than initially projected.


CBN Monetary Policy Review

Credit to the
Govt (CG)
Significantly
Below the
Annual
Target
NCG declined significantly by 27.71 per cent at endDecember 2024, largely due to the reduction in
government financing as well as way and means
advances by the CBN. This development reflects the
effectiveness of the ongoing fiscal-monetary policy
coordination that yielded sustained efforts to ensure
loans to the government remain within the statutory
limit while also channelling adequate credit to the
private sector to stimulate economic growth.

Credit to the
Private Sector
(CP)
Marginally
Below the
Annual
Target
CPS grew mildly by 3.20 per cent to ₦75,532.73 billion
at End-December 2024 from ₦73,191.95 billion at endJune 2024, and it represents an increase of 20.78 per
cent compared with ₦62,538.68 billion at endDecember 2023. This growth was largely driven by
ODCs credit to the core private sector that surged by
about ₦12.99 trillion in the review period. Meanwhile,
the CPS year-to-date growth of 20.78 per cent was
lower
than
the
annual
provisional
indicative
benchmark of 22.65 per cent. This suggests that there
is a need for Management to ensure continued credit
extension, particularly to the core private sector
through the banking system, to further stimulate
aggregate demand and promote overall economic
growth.
Source: Statistics Department, CBN

3.4
Domestic
Financial
Markets
Developments
In the second half of 2024, Nigeria’s
financial
market
continued
to
be
influenced by developments in the
global and domestic economies. These
developments
include
persisting
conflicts in the Middle East, war between
Russia
and
Ukraine,
uncertainties
surrounding the outcome of the U.S.
election, volatility in commodity prices,
and
high
global
interest
rates.
Furthermore, the attractive yields on
advanced-economy securities led to
capital
flow
reversals
from
riskier
Emerging
Markets
and
Developing
Economies
(EMDEs),
resulting
in
increased exchange rate pressures.

In
the
domestic
economy,
key
developments
included
the
recapitalisation of ODCs, and continued
reforms in the foreign exchange market.
Major reforms in the FX market were the
implementation of the Electronic Foreign
Exchange Matching System (EFEMS) and
the introduction of the FX Code, both
aimed at enhancing transparency.

In the money market, rates trended
higher, reflecting the prevailing tight
monetary policy stance. In the interbank
market, the Open Buy Back (OBB)
witnessed higher trading activitiy than
the Interbank Call segment, reflecting
continued
preference
for
the
collateralised segment of the market.

The
capital
market
was
bullish
throughout the review period, reflecting
a rise in investor confidence and
optimistic
outlook.
This
trend
was
bolstered
by
the
ongoing
recapitalisation exercise of ODCs, a


CBN Monetary Policy Review

surge in foreign investor participation in
the market, and comparatively high
yield in the fixed-income market, among
others.

3.4.1
The Money Market
In the second half of 2024, money
market rates rose, reflecting the impact
of the Bank’s tight monetary policy
stance. Transactions in the Open Buy
Back
segment
dominated
market
activities with the rate rising to an
average of 29.27 per cent, compared
with 12.60 per cent in the corresponding
period. The OBB recorded its lowest rate
of 26.64 per cent in July 2024 and highest
rate of 30.42 per cent in November 2024.

In the Interbank Call segment, the rate
averaged 28.85 per cent in the second
half of 2024, compared with 11.53 per
cent in the corresponding period. The
highest rate was 30.73 per cent in August
2024 while the lowest rate of 25.13 per
cent was recorded in July. Market
participants demonstrated a preference
for the collateralised OBB over the
uncollateralised Interbank Call due to
perceived counterparty risk in the latter
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 27.16 per cent in the second
half of 2024, compared with 12.37 per
cent in the corresponding half. The
NIBOR recorded its highest rate of 28.26
per cent in December 2024 and lowest
rate of 26.31 per cent in August.

In general, activities within the money
market in the review period were
influenced by the underlying liquidity
levels in the banking system, driven by
statutory monthly FAAC disbursements,
maturing government securities, and
Open Market Operations.

Table 3.12
Weighted Average Monthly Money Market
Interest Rates (%) July-December, 2024
Source: CBN Statistical Database

3.4.2 The Capital Market
The capital market witnessed improved
performance in the second half of 2024,
signalling growing investor confidence in
the economy. The performance was led
by the equities segment of the market,
driven by the ongoing recapitalisation
exercise of ODCs.

Bond
yields
remained
broadly
depressed compared with short-term
yields, suggesting investor preference for
short-term securities over longer term
fixed-income securities. In the bonds
market, FGN bonds decreased to N44.93
trillion in December 2024 from N46.13
trillion in June, reflecting a decline to
41.12 per cent of aggregate market
capitalization in December 2024 from


CBN Monetary Policy Review

44.24 per cent in June. The value of
state/municipal bonds and corporate
bonds at end-December were N348.99
billion and N1.18 trillion accounting for
0.32 per cent, and 1.09 per cent of
aggregate
market
capitalization,
respectively.

The equities market increased by 10.89
per cent in December 2024, accounting
for 57.44 per cent of aggregate market
capitalization,
while
the
bonds
accounted for 42.53 per cent and
exchange-traded funds accounted for
the balance of 0.03 per cent.

Figure 3.25
Structure of the Nigerian Capital Markets
(December 2024)

Source: NGX group

3.4.2.1 Equities Market
The All-Share Index (ASI) increased by
2.87 per cent to 102,926.40 at the end of
December 2024, from 100,057.49 at the
end of June 2024. On a year-on-year
basis, it increased by 37.65 per cent
compared with 74,773.77 at the end of
December
2023.
Similarly,
Market
capitalization (MC) increased by 10.88
per cent to N62.76 trillion at the end of
December 2024 from N56.60 trillion at
the end of June 2024. Compared with
the corresponding period, it increased
by 53.45 per cent from N40.92 trillion at
the end of December 2023.

Figure 3.26
NGX ASI and MC (June 2024– December 2024)

Source: Nigerian Exchange Group

Aggregate stock market turnover in the
second half of 2024 stood at 74.74 billion
shares, valued at N1,543.29 billion in
1,188,215 deals. This represents a rise of
13.98 per cent compared with 60.76
billion shares valued at N1,244.48 billion
in 1,153, 215 deals in the first half of 2024.
Compared with 69.45 billion shares,
valued at N1,065.09 billion in 935,891
deals at the end of December 2023, it
increased by 7.62 per cent.

On
sectoral
contribution,
market
capitalization was dominated by the
Rest of Food and Beverages sector, with
a share of 13.18 per cent at end41.12%

FGN Bonds
State/Municipal bonds
Corporate bonds
Equities
ETP

Jun-24
Jul-24
Aug-24
Sep-24
Oct-24
Nov-24
Dec-24
N'Trillions
Index
MC(Equities) N’Trillion)
ASI


CBN Monetary Policy Review

December 2024, compared with 13.83
per cent at end-June 2024. Although the
sector’s contribution declined by 0.65
percentage
point,
its
contribution
exceeded that of other sectors.

Figure 3.27
NGX Market Capitalization by Sector as at endDecember 2024

Source: Nigerian Exchange Group

3.4.2.2 Bond Market
Federal Government of Nigeria (FGN)
bonds dominated market activities in
the second half of 2024. Corporate
bonds ranked second in market volume,
while state and municipal bonds had
the least activity in the review period.

The value of FGN bonds moderated by
2.60 per cent to N44.93 trillion at endDecember 2024 from N46.13 trillion at
end-June 2024. Compared with the
value of N32.67 trillion at the end of
December 2023, this reflects an increase
of 37.53 per cent. Consequently, FGN
bonds accounted for 41.12 per cent of
aggregate market capitalization at endDecember 2024 while corporate bonds
and state/municipal bonds accounted
for 1.09 and 0.32 per cent of market
capitalisation valued at N1.19 trillion and
N348.00 billion, respectively.

The 10-year dollar-denominated bond
yield for Nigeria was positive in the
second half of 2024. Compared with
December 2023, it however decreased
by 57.6 basis points to 8.53 per cent from
9.10 per cent. Similarly, it declined by 116
basis points compared with the yield of
9.69 per cent in June 2024.

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

Source: Bloomberg

A comparison of yield curves for endDecember 2023, end-June 2024, and
end-December 2024 shows gradual
transformations in the Nigerian bond
market. In December 2023, the yield
curve was upward sloping (normal
curve) ranging between 3 per cent for
short-term maturities to 16 per cent for
longer-tenored bonds. This indicates
investor
expectation
of
economic
growth
and
moderate
inflationary
pressure.

04/01/2022
04/01/2023
04/01/2024
Yield (%)
Bond yield


CBN Monetary Policy Review

The yield curve for June 2024, however,
showed inversion as yields ranged
between 25 per cent for short-term
maturities to about 22 per cent for
longer-tenored instruments, suggesting
waning investor confidence in the longterm prospects of the economy. The
observed inversion was accentuated in
the December 2024 yield curve, with
short-term yields at 21 per cent and
longer-tenored maturities at 17 per cent.

Figure 3.29
FGN Bond Yield Curves: December 29th, 2023,
June 28th, 2024, & December 31st, 2024.

Source: FMDQ daily quotation list

The volume of outstanding corporate
bonds decreased by 30.99 per cent to
N1.18 trillion in December 2024 from
N1.71 trillion in June 2024. This trend may
be attributable to declining yields in the
market.

Activities in the Sub-national bond
market remained lower, compared with
the corporate and federal government
bond
segments.
Accordingly,
outstanding
state/local
government
bonds stood at ₦348.00 billion apiece at
end-June and end-December 2024.

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

3.4.3
Foreign Exchange Market
In the second half of 2024, the Nigerian
foreign exchange market continued to
reflect
the
interplay
of
global
uncertainties
and
domestic
policy
interventions. Despite
incidences of
volatility, the Bank intensified efforts to
improve
supply
and
stabilise
the
exchange rate.

On
the
domestic
front,
the
Bank
implemented a series of structural
reforms
aimed
at
enhancing
transparency and improving market
liquidity.

Figure 3.30
Average Monthly Naira/US Dollar Exchange Rate
January –December 2024

Source: CBN Statistical Database

The impact of these reforms was evident
in improved market liquidity, reduced
arbitrage opportunities, and enhanced

Jan-24
Feb-24
Mar-24
Apr-24
May-24
Jun-24
Jul-24
Aug-24
Sep-24
Oct-24
Nov-24
Dec-24
NFEM (Monthly Average)
NFEM (End Month)


CBN Monetary Policy Review

transparency.
Diaspora
remittance
channels
were
further
expanded
through broader IMTO participation.
These steps contributed to more stable
FX
flows
and
moderated
foreign
exchange demand pressures.

3.4.4
Average
and
End-Period
Exchange Rates
The average exchange rate at the
Nigerian
Foreign
Exchange
Market
(NFEM) depreciated by 16.00 per cent to
₦1,605.07/US$ in the second half of 2024
from ₦1,348.41/US$ in the preceding
half. In the same vein, the end-period
exchange rate depreciated by 4.24 per
cent to N1,535.82/US$ at end-December
2024 from N1,470.69/US$ at end-June
2024. This depreciation was driven by
inadequate
supply
amid
sustained
demand pressures. Elevated interest
rates in developed economies also
resulted in a net capital outflow from the
domestic economies.

Table 3.13
Average Monthly Exchange Rate (N/US$),
January – December 2024
Period
NFEM (Average)
NFEM (EndPeriod)
2024: January
924.40
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
1,348.41
1,419.52
2024: July
1,560.68
1,611.71
August
1,585.88
1,596.64

2 The Interpretation of NEER and REER is based on
the direct quotation of the naira exchange rate
September
1,618.22
1,601.53
October
1,641.15
1,670.47
November
1,670.78
1,663.90
December
1,553.73
1,535.82
Average
1,605.07
1,613.64
Source: CBN Statistical Database

3.4.6
Nominal
and
Real
Effective
Exchange Rates2
In the review period, the Nominal
Effective
Exchange
Rate
(NEER)
increased by 91.60 per cent to an
average of 706.07 from 368.51 in the
corresponding period. Compared with
625.53 in the preceding period, it
increased by 12.87 per cent. The
increase
in
NEER
indicates
a
depreciation of the local currency
against
the
weighted
basket
of
currencies of Nigeria’s trading partners.

The Real Effective Exchange Rate (REER)
decreased by 48.23 per cent to an
average of 140.79 from 94.98 in the
corresponding period. Compared with
141.25 in the preceding period of 2023, it
decreased by 0.32 per cent. The decline
in REER indicates a loss of trade
competitiveness with Nigeria’s trading
partners as exports became more
expensive
and
imports
relatively
cheaper.


to one unit of the basket of currencies of trading
partners.


CBN Monetary Policy Review

Table 3.14
Average Nominal and Real Effective Exchange
Rates Indices (July 2023 – December 2024)
Period
NEER
REER
Jul
344.16
93.81
Aug
338.03
89.58
Sep
338.45
87.87
Oct
362.55
92.75
Nov
421.99
105.61
Dec
405.90
99.44
2023: H2
Average
368.51
94.98
Jan
604.31
144.50
Feb
685.27
159.90
Mar
588.46
133.58
Apr
582.95
129.84
May
652.37
142.65
Jun
639.85
137.00
2024: H1
Average
625.53
141.25
Jul
704.63
148.11
Aug
710.50
146.42
Sep
720.19
145.09
Oct
732.28
144.41
Nov
716.21
137.72
Dec
652.60
122.97
2024: H2
Average
706.07
140.79
Source: CBN Statistical Database


Figure: 3.31
Nominal and Real Effective Exchange Rates
Indices (July 2023– December 2024)

Source: CBN Statistics Department

3.4.7 Foreign Exchange Flows through
the CBN
Foreign exchange inflows through the
CBN increased by 41.90 per cent to
US$23,527.85 million in the second half of
2024 from US$16,580.46 million in the
preceding half. Compared with the
corresponding
period
of
2023,
it
increased by 106.62 per cent from
US$11,386.93 million. Foreign exchange
outflows
through
the
Bank
also
increased
by
18.78
per
cent
to
US$17,487.14 million in the second half of
2024 from US$14,721.87 million in the
preceding
period.
Compared
with
US$12,146.97 million in the corresponding
period of 2023, it increased by 43.96 per
cent.

Consequently, there was a net inflow of
US$6,040.72
million
and
US$1,858.59
million in the current and preceding
periods, respectively, while there was a

NEER


CBN Monetary Policy Review

net outflow of -US$760.04 million in the
corresponding period.

Figure 3.32
Monthly Foreign Exchange Flows through the CBN
(January 2021 – May 2022) (US$’ Billion)

Source: CBN Statistics Department

Table 3.15
Monthly Foreign Exchange Flows through the CBN
(July 2023 – December 2024) (Million US$)
Dates
CBN
Inflow
CBN
Outflow
Net Flow
Jul-23
2,588.85
2,804.65
-215.80
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
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

Apr-23
2,142.33
1,425.69
716.64
May-24
3,169.17
3,151.98
17.19
Jun-24
3,182.07
1,134.25
2,047.82
2024 H1
16,580.46
14,721.87
1,858.59
Jul-24
4,675.25
2,794.33
1,880.92
Aug-24
2,132.24
2,669.12
(536.88)
Sep-24
5,223.21
1,842.47
3,380.74
Oct-24
4,404.55
3,693.66
710.89
Nov-24
2,972.70
2,246.08
726.62
Dec-24
4,119.91
4,241.48
-121.57
2024 H2
23,527.85
17,487.14
6,040.72
Source: CBN Statistics Department


-2,000
-1,000


FX Inflow (US$ Million)
FX Outflow (US$ Million)
Netflow (US$ Million)


CBN Monetary Policy Review

Box 1: The Central Bank of Nigeria’s Recent Reforms in the Foreign Exchange Market
Prioritising the efficiency and transparency of FX operations is central to the effective
functioning of a market-driven exchange rate system, especially the 'willing buyer, willing seller'
model. These are not only critical for the price discovery process but also enhance market
credibility and foster investor confidence.

While the Central Bank of Nigeria (CBN) continues to monitor key developments in the evolving
foreign exchange market, it has implemented vital reforms to boost efficiency, ensure
adequate liquidity, and eliminate unethical practices among market participants. In the
second half of 2024, the Bank strengthened the existing FX market reforms by introducing two
key initiatives: the development and adoption of a Nigeria Foreign Exchange Code (FX Code)
and the implementation of the Electronic Foreign Exchange Matching System (EFEMS).

1.
The Nigerian Foreign Exchange Code
Historically, the Application Centric Infrastructure (ACI) Model Code, released in 2000, was the
first industry-wide code of conduct. Before this, no rule book had governed the behaviour of FX
market participants for over 30 years. As the market matured, the introduction of rules and
regulations became necessary as the emergence of a series of abuses created a “deficit of
trust.” This birthed the FX Global Code in 2017, which replaced the ACI Model Code. The FX
Code of Conduct is a set of global principles developed by the Global Foreign Exchange
Committee (GFXC). With fifty-five (55) principles across six (6) primary areas, the global code
focuses on promoting integrity, discipline and effectiveness of the foreign exchange markets.
Aligning with international standards, while addressing the issues in the Nigerian foreign
exchange market, the Central Bank of Nigeria launched the Nigeria FX Code in October 2024.
The Bank developed an FX Code Book to set standards for transactions in the Nigerian FX
market. The code book is expected to significantly enhance price discovery, ethical conduct,
market discipline and transparency in the FX market. Nigeria FX code draws principles from the
FX Global Code and is aligned with best practices across notable jurisdictions. Fifty-two (52) of
the fifty-five (55) principles have been adopted. It is also organised around six (6) leading
principal areas:
•
Ethics: Market Participants are expected to behave in an ethical and professional manner
to promote the fairness and integrity of the FX Market.
•
Governance: Market Participants are expected to have a sound and effective
governance framework to provide for clear responsibility for and comprehensive oversight
of their FX Market activity and to promote responsible engagement in the FX Market.
•
Execution: Market Participants are expected to exercise care when negotiating and
executing transactions to promote a robust, fair, open, liquid, and appropriately
transparent FX Market.
Information Sharing: Market Participants are expected to be clear and accurate in their
communications and to protect information to promote effective
communication that supports a robust, fair, open, liquid, and appropriately transparent FX
Market.
•
Risk Management and Compliance: Market Participants are expected to promote and
maintain a robust control and compliance environment to effectively identify, manage,
and report on the risks associated with their engagement in the FX Market.


CBN Monetary Policy Review

•
Confirmation and Settlement Processes: Market Participants are expected to put in place
robust, efficient, transparent, and risk-mitigating post-trade processes to promote the
predictable, smooth, and timely settlement of transactions in the FX Market.

The FX Code has been issued pursuant to the CBN Act 2007 and the BOFIA Act 2020, which
empowers the Central Bank of Nigeria (CBN) to issue directions with respect to the standards
to be adhered to by an institution in the conduct of foreign exchange business in Nigeria. It
represents a decisive step towards achieving good governance in the Nigerian FX market and
is mandatory for market participants. The CBN, banks, and financial institutions leaders have
collectively pledged their commitment to the FX Code by formally signing their statements of
commitment. The CBN’s signed statement of commitment is available on the Bank’s website.

2.
Electronic Foreign Exchange Matching System (EFEMS).
The Central Bank of Nigeria also introduced the Electronic Foreign Exchange Matching System
(EFEMS) for foreign exchange transactions in the interbank FX market. This is to ensure
transparency, fair and efficient FX trading, minimising counterparty risk and ensuring
compliance with CBN regulations. Consequently, the Bank adopted the Bloomberg BMatch
solution as its Electronic Foreign Exchange Matching System. The Bloomberg BMatch platform
will enhance the integrity and operational efficiency of the FX market by providing transparent
and automated matching of trades, leading to market efficiency and greater price discovery.
It offers spot matching functionality for the US Dollar against the Nigerian Naira, allowing
anonymous orders to be placed into a central limit order book, which are then displayed and
matched with counterparty orders based on mutual trading limits and other parameters
configured by each bank. Major features of the BMatch system are as follows:

1.
Centralised Order Book: The B-match provides a real-time and anonymous order book
where traders place bids and offers.
2.
Market Driven Prices: Prices are determined by supply and demand rather than a single
market maker.
3.
Anonymous Trading: Authorised dealers in the FX market trading on the matching system
trade without knowing who the other participants are, thereby reducing opportunities for
unethical market conduct.

The BMatch solution distinctly contributes to improving the Nigerian FX in several ways. More
importantly, the Bank can monitor liquidity in the market and take more proactive than reactive
actions. In addition, the anonymity of the market reduces opportunities for certain unethical
practices in the market.

The BMatch platform, alongside the adoption of the Nigeria FX Code by market participants,
will enhance the Central Bank's market surveillance and promote ethical practices, supporting
the deepening of the FX market and broader macroeconomic stability.


CBN Monetary Policy Review

3.4.8 Foreign Exchange Flow through the
Economy
Total foreign exchange inflows through
the economy in the second half of 2024,
rose by 7.54 per cent to US$51,526.70
million from US$47,915.62 million in the
preceding half year. Compared with
US$32,029.89 million in the corresponding
half, it rose by 60.87 per cent.

Similarly,
total
foreign
exchange
outflows through the economy in the
second half of 2024 increased by 1.78
per cent and 41.30 per cent to
US$20,481.48 million from US$20,123.91
million and US$14,494.83 million in the
preceding and corresponding periods,
respectively.

Consequently, net inflows through the
economy increased to US$31,045.22
million in the second half of 2024 from
US$27,791.69 million and US$17,535.06
million
in
the
preceding
and
corresponding periods, respectively.

Table 3.16
Monthly Foreign Exchange Flows through the Economy
(July 2023 – December 2024) (US$ Million)

Source: CBN Statistics Department


Dates
Inflows
(CBN)
Inflows
(Autonom
ous)
Total
Inflows
Outflows
(CBN)
Outflows
(Autono
mous)
Total
Outflow
Net Flow
Net Flow
(CBN)
Net Flow
(Autonomo
us)
Jul-23

Aug-23

Sep-23

Oct-23

Nov-23

Dec-23

2023 H2 Total

Jan-24

Feb-24

Mar-24

Apr-24

May-24

Jun-24

2024 H1 Total

Jul-24

Aug-24

Sep-24

Oct-24

Nov-24

Dec-24

2024 H2 Total


CBN Monetary Policy Review

Figure 3.33
Monthly Foreign Exchange Flows through the
Economy
(July 2023 – December 2024) (US$ Billion)

Source: CBN Statistics Department

3.5
Monetary
Policy
Committee
Meetings
In the second half of 2024, the
Monetary Policy Committee (MPC) met
in July, September, and November to
review key economic developments.

At the July 2024 meeting, the Committee
noted with concern, the welfare impact
of rising inflation on households and
businesses,
stressing
its
unwavering
commitment to controlling inflation and
fostering
price
stability.
Members
expressed
optimism
that
monetary
policy actions, in collaboration with
fiscal measures aimed at addressing
non-monetary drivers of food inflation,
would lead to moderation in headline
inflation in the short to medium term.

The MPC commended the Bank’s efforts
aimed at improving the efficiency of the
foreign exchange market and stabilizing
the exchange rate. Members were
convinced that stability in the foreign
exchange
market
was
critical
to
achieving price stability.

The
Committee
reviewed
the
key
financial soundness indicators of the
banking system and noted that the
system remained safe, sound and stable.
The Committee further commended the
management
for
the
initiative
to
recapitalise the banking system and
called for sustained regulatory oversight
to ensure the continued stability of the
system.

Based on the foregoing considerations,
the Committee decided by a majority
vote to raise the MPR by 50 basis points
to 26.75 per cent from 26.25 per cent;
adjust the asymmetric corridor around
the MPR to +500/-100 basis points; retain
the Cash Reserve Requirement for
Deposit Money Banks and Merchant
Banks
45.00
and

per
cent,
respectively; and retain the Liquidity
Ratio at 30 per cent.

During the September 2024 meeting, the
Committee observed with relief the
moderation in headline inflation in July
and August 2024. It, however, noted that
in contrast to food inflation, core
inflation
remained
elevated,
driven
largely by energy prices. The MPC noted
with concern the rising fiscal deficit and
money supply. Members emphasized
that
collaboration
with
the
fiscal
authority was key in achieving price
stability.

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 tight


Total Inflows
Total Outflow


CBN Monetary Policy Review

policy stance and ongoing reforms in
the FX market.

The MPC also reviewed developments in
the banking system, noting 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 guidelines.

Following
these
considerations,
the
Committee raised the MPR by 50 basis
points to 27.25 per cent from 26.75 per
cent; retained the asymmetric corridor
around the MPR at +500/-100 basis
points;
raised
the
Cash
Reserve
Requirement of Deposit Money Banks
and Merchant banks by 500 and 200
basis points to 50.00 and 16.00 per cent,
respectively; and retained the Liquidity
Ratio at 30.0 per cent.

At the November 2024 meeting, the
MPC observed renewed inflationary
pressures, with headline, food, and core
inflation rising year-on-year in October
2024.
The
Committee
expressed
concern about the persistence of price
pressures and their impact on the
welfare of citizens, reemphasizing its
commitment to achieving price stability.
Members noted the improvement in the
external
sector,
reflected
by
the
increase in the current account surplus,
enhanced remittances and capital
inflows, but expressed concerns about
the
persistence
of
exchange
rate
pressure.
The MPC commended the continued
resilience and stability of the banking
system despite significant exogenous
and endogenous headwinds. Members,
however, called on the Bank to maintain
close surveillance on the banking system
to ensure continued compliance with
regulatory guidelines.

Based on the foregoing considerations,
the
Committee
decided
by
a
unanimous vote to raise the MPR by 25
basis points to 27.50 per cent from 27.25
per cent; retain the asymmetric corridor
around the MPR at +500/-100 basis
points;
retain
the
Cash
Reserve
Requirement of Deposit Money Banks
and Merchant Banks at 50.00 and 16 per
cent,
respectively;
and
retain
the
Liquidity Ratio at 30.00 per cent.

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


CBN Monetary Policy Review

CBN Monetary Policy Review

CHAPTER FOUR
ECONOMIC OUTLOOK AND RISKS

4.1
Outlook for Global Output
he global economy is forecast to
remain broadly stable at 3.2 and 3.3
per
cent
in

and
2025,
respectively, as inflation moderates and
interest rates ease. Other driving factors
include the expected lowering of the
cost of production as energy prices
decline, and the supply of labour
improves.

Growth in the advanced economies is
projected to remain unchanged at 1.7
per cent in 2024 compared with 2023
and rise to 1.9 per cent in 2025. The
projection is hinged on anticipated
strengthening of consumer spending,
sustained job creation, higher real
wages, rising asset prices and increased
non-residential
investment.
Although
growth in the United States is projected
to slow from 2.9 per cent in 2023 to 2.8
and 2.7 per cent in 2024 and 2025,
respectively, it is expected to lead
performance in this group. In the euro
area, growth is projected to recover
from 0.4 per cent in 2023 to 0.8 and 1.0
per cent in 2024 and 2025, respectively.
In the United Kingdom, output growth is
projected to improve to 0.9 and 1.6 per
cent in 2024 and 2025, respectively, from
0.3
per
cent
in
2023,
driven
by
moderation
in
inflation
and
lower
interest rates. In Japan, the economy is
expected to contract to -0.2 per cent in
2024 from 1.5 per cent in 2023, reflecting
supply chain disruptions, particularly in
the automotive industry. It is, however,
projected to recover to 1.1 per cent in
2025.

Growth in the Emerging Markets and
Developing Economies is projected to
decelerate marginally to 4.2 per cent
apiece in 2024 and 2025, from 4.4 per
cent in 2023. Improved projections for
economies in the Middle East, Central
Asia
and
Sub-Saharan
Africa
are,
however, expected to moderate the
deceleration.

In Emerging and Developing Asia,
growth is expected to moderate to 5.2
and 5.1 per cent in 2024 and 2025,
respectively, from 5.7 per cent in 2023.
India is projected to grow at a slower
pace of 7.0 and 6.5 per cent, in 2024 and
2025, respectively, as the economy
reverts to its long-run growth path, as
pandemic-induced pent-up demand
eases. Similarly, growth in China, is
projected to slow to 4.8 and further to 4.5
per cent in 2024 and 2025, respectively,
as the weakness in the real estate sector
persists.

In Emerging and Developing Europe,
growth is expected to moderate to 3.2
and 2.2 per cent in 2024 and 2025,
respectively, from 3.3 per cent in 2023.
Growth in Russia is projected to improve
3.8 per cent in 2024, compared with 3.6
per cent in 2023. It will, however,
moderate to 1.4 per cent in 2025, largely
due
to
declining
investment
and
consumer spending.

In Latin America and the Caribbean,
growth is projected to remain stable at
2.4 per cent in 2024, the same as in 2023,
before rising marginally to 2.5 per cent in
2025. Growth in this group is expected to
be led by Brazil, which is projected to
improve to 3.7 per cent in 2024 from 3.2
per cent in 2023, but moderate to 2.2 per
cent in 2025.
T


CBN Monetary Policy Review

In Sub-Saharan Africa (SSA), growth is
expected to improve to 3.8 and 4.2 per
cent in 2024 and 2025, respectively, from
3.6 per cent in 2023. In this group, growth
is expected to be led by Nigeria, which
is projected to expand by 3.1 and 3.2 per
cent in 2024 and 2025, respectively, from
2.9 per cent in 2023. In South Africa,
growth is also expected to improve to
0.8 and 1.5 per cent in 2024 and 2025,
respectively, from 0.7 per cent in 2023.


Table 4.1 Global Output and Price 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, October 2024
*Forecast

4.2 Outlook for Global Inflation
Global headline inflation is projected to
decline to 5.7 per cent in 2024 and 4.2
per cent in 2025, from 6.7 per cent in
2023. This is expected to be driven by
easing
supply-chain
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
towards
their
long-run
objectives of 2.0 per cent in 2024. In the
Emerging
Markets
and
Developing
Economies,
however,
inflation
is
projected to moderate at a slower pace
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-Saharan Africa.


CBN Monetary Policy Review

Table 4.2 Global Inflation Outlook

Source: IMF WEO, October 2024
*Forecast

The Central Bank of Nigeria (CBN)
forecasts real GDP to grow by 4.17 per
cent in 2025 from 3.38 per cent in 2024.
This
is
premised
on
anticipated
improvement in economic activities in
the first half of 2025, driven by the initial
benefits of exchange‐rate liberalisation
and reforms in the upstream sector of
the oil industry. These policy measures
should underpin a more stable naira,
narrow trade deficits, diversify sources of
government revenue, and expand fiscal
space for infrastructure and social
spending.

Headwinds to the recovery, however,
include
limited
access
to
capital,
elevated
public
debt
levels,
tight
monetary
conditions,
and
ongoing
global geopolitical uncertainties. In this
context, intensified efforts by fiscal
authorities to broaden the tax base and
enhance domestic revenue mobilisation
will be crucial to reinforcing public sector
balance
sheets
and
sustaining
macroeconomic resilience.

Figure 4.1 Nigeria’s GDP growth outlook
Source: CBN Staff Estimates

4.3 Outlook for Domestic Inflation
Headline inflation is projected to
remain elevated in the first half of 2025,
with forecasts indicating a modest
acceleration in price pressures. Inflation
is expected to rise from 23.81 per cent in
January 2025 to a peak of 25.42 per cent
in February, before easing gradually to
24.85 per cent by June 2025. Food
inflation is anticipated to remain sticky,
beginning at 23.62 per cent in January,
dipping slightly in March and April, and
inching up again to 23.36 per cent in
June. In contrast, core inflation is
forecast to remain relatively subdued,
declining marginally from 20.05 per cent
in January to 19.97 per cent in June,
reflecting
some
moderation
in
underlying price pressures.

The persistence of inflation at levels well
above the indicative benchmark of 6–9
per cent is driven by a combination of
structural and monetary factors. These
include the lingering impact of fuel

Pessimistic
Baseline
Optimistic


CBN Monetary Policy Review

subsidy removal and liberalisation of the
foreign exchange market, continued
insecurity in key food-producing regions,
spillover effects of the Russia–Ukraine
conflict,
election-related
fiscal
spending, as well as pressures from
exchange rate depreciation, capital
inflow reversals, and widening fiscal
deficits.

Nonetheless,
some
moderating
influences are expected to provide relief
in
the
first
half
of
2025.
The
contractionary
stance
of
monetary
policy is likely to rein in demand
pressures, while renewed efforts to
address security concerns could ease
supply
constraints.
Moreover,
the
significant decline in inflation that is
expected following the rebasing of the
CPI basket is likely to generate a base
effect that tapers year-on-year inflation
growth in the months ahead.

On balance, inflation is expected to
increase
in
early

before
moderating slightly towards mid-year.
However, the persistence of elevated
food and headline inflation underscores
the
need
for
a
dual
approach;
continued
monetary
tightening
to
anchor
expectations,
alongside
structural reforms to address supply
bottlenecks and stabilise the exchange
rate.

Table 4.3: Inflation Forecasts
YEAR-ON-YEAR INFLATION RATE

12-MMA INFLATION RATE
Status
Month
Headline
inflation
Food
inflation
Core
inflation
Status
Month
Headline
inflation
Food
inflation
Core
inflation
Actual
2024m7
33.40
39.53

27.47
Actual
2024m7
30.76
36.36

24.65
2024m8
32.15
37.52

27.58
2024m8
31.26
36.99

25.18
2024m9
32.70
37.77

27.43
2024m9
31.73
37.53

25.64
2024m10
33.88
39.16

28.37
2024m10
32.26
38.12

26.12
2024m11
34.60
39.93

28.75
2024m11
32.77
38.67

26.64
2024m12
34.80
39.84

29.28
2024m12
33.24
39.12

27.15
Forecast
2025m1
23.81

23.62

20.05
Forecast
2025m1
32.67

38.11

26.77
2025m2
25.42

23.31

19.72
2025m2
32.15

36.90

26.32
2025m3
25.39

23.19

19.84
2025m3
31.50

35.49

25.81
2025m4
25.05

23.14

19.89
2025m4
30.78

34.05

25.23
2025m5
24.96

23.32

19.93
2025m5
30.03

32.60

24.64
2025m6
24.85

23.36

19.97
2025m6
29.25

31.14

24.02
Source: CBN Staff Estimates


CBN Monetary Policy Review

4.4
The Outlook for Monetary Policy
in the First Half of 2025
Monetary policy through the first half of
2025 is projected to be calibrated to
address uneven recovery and evolving
dynamics in the global and domestic
economies. Key amongst these are the
uncertainties
associated
with
the
election of a new U.S. president,
considering the potential escalation of
trade tariffs. The possible trade disputes,
ongoing
geopolitical
tensions,
and
moderately
tight
global
financial
conditions
could
result
in
slower
disinflation in the first half of 2025.
Consequently, major central banks may
be
cautious
in
adopting
an
accommodative policy stance.

While the Nigerian economy is showing
signs of stabilisation, persistent demand
pressures and structural bottlenecks
have continued to put upward pressure
on domestic prices, with implications for
the direction of monetary policy. Among
the most pressing challenges are the
security disruptions in food-producing
regions, the high cost of energy, and the
high fiscal deficit.

Consequently, the Central Bank of
Nigeria
will
continue
to
prioritise
anchoring inflation expectations and
preserving
exchange-rate
stability.
Additionally, the Bank would work
closely with the fiscal authority to
improve fiscal-monetary coordination
towards
achieving
sustainable
macroeconomic stability.


4.5 The Risks to the Outlook
4.5.1
Risks
to
The
Global
Output
Projection
The
global
economy
has
shown
remarkable
resilience,
with
easing
inflationary pressures prompting several
central banks to commence gradual
easing of monetary policy. Nonetheless,
the outlook for recovery remains fragile
and subject to several downside risks.
Foremost
amongst
these
is
the
escalation of geopolitical tensions in
major commodity-producing regions,
with the potential to disrupt global
supply chains and trigger volatility in
energy and food prices. Concurrently,
the potential for trade fragmentation,
driven by protectionist measures and
realignments of international alliances,
pose a significant risk to recovery of the
global economy.

Persisting structural challenges in many
Emerging
Markets
and
Developing
Economies (EMDEs) pose a significant
risk for macroeconomic stability. Some
of these risks include growing sovereign
debt levels, narrowing fiscal space,
infrastructural deficit, high inflation, and
tight financial conditions. As a result, the
outlook for recovery in this group remains
prone to structural shocks and global
macroeconomic uncertainties.

4.5.2 Risks to Domestic Output
Despite a cautiously optimistic outlook
for the domestic economy, several
structural
bottlenecks
and
external
shocks pose downside risks to output
growth. A major constraint is the high
cost and inadequate supply of energy,
both of which constitute a headwind to
production
and
undermine
private


CBN Monetary Policy Review

investment. Weak consumer demand,
elevated inflationary pressures, and
declining
real
incomes
further
compound
these
challenges.
The
collective impact of these factors is
expected to pose a significant risk to
output expansion.

While recent improvements in crude oil
production are encouraging, downside
risks persist due to the continued
incidences
of
oil
theft,
pipeline
vandalism, and the deterioration of
ageing extraction infrastructure. These
issues not only limit the oil sector’s
contribution to GDP but also threaten
foreign currency earnings and fiscal
revenue. The economy also remains
vulnerable to external shocks, which
could threaten macroeconomic stability
and dampen investor sentiment. These
factors include exchange rate volatility,
disruptions in global trade flows, and the
spillover
effects
of
tighter
global
financial conditions. To mitigate these
risks, improved coordination between
the monetary and fiscal authorities will
be
required
to
upscale
energy
infrastructure,
revitalise
industrial
capacity, and build resilience in the
external sector.


4.5.3 Risks to Domestic Inflation
Inflation
is
projected
to
moderate
gradually in the near-to-medium term
forecast
horizon.
It
is,
however,
vulnerable to several risks which may
derail this trajectory and delay ongoing
efforts to achieve price stability. Foreign
exchange market pressures also remain
a significant source of risk, as exchange
rate volatility and supply constraints
could
lead
to
imported
inflation.
Additionally, the elevated liquidity level
in the financial system may fuel foreign
exchange
demand
and
intensify
upward pressure on consumer prices.
Deficiencies in domestic production and
distribution channels may further amplify
these pressures.

Adverse climatic conditions, such as
flooding
and
desertification,
could
disrupt agricultural output, constrain
food supply, and trigger a resurgence in
food inflation. Additionally, rising costs of
energy and logistics may heighten costpush inflation across key production and
distribution chains.

Addressing these risks will require a
coordinated response from both the
monetary and fiscal authorities to rein in
excess liquidity, stabilise the exchange
rate and ease supply-side bottlenecks.


CBN Monetary Policy Review

APPENDICES

MONETARY
POLICY
COMMUNIQUE
NO.153 Date: Tuesday, 23 July 2024
MONETARY POLICY RATE HIKED TO 26.75
PERCENT

1.0
Background
The Monetary Policy Committee (MPC)
of the Central Bank of Nigeria (CBN) held
its 296th meeting on the 22nd and 23rd
of July 2024 to review recent economic
and financial developments as well as
assess risks to the outlook. Eleven
members attended the meeting.

Decisions of the MPC
The Committee’s decisions are as
follows:
1.
Raise the MPR by 50 basis points
to 26.75 per cent from 26.25 per cent.
2.
Adjust the asymmetric corridor
around the MPR to +500/-100 from +100/-
300 basis points.
3.
Retain the Cash Reserve Ratio of
Deposit Money Banks at 45.00 per cent
and Merchant Banks at 14 per cent.
4.
Retain the Liquidity Ratio at 30.00
per cent

Considerations
The Committee was mindful of the
effect of rising prices on households and
businesses and expressed its resolve to
take
necessary
measures
to
bring
inflation under control. It re-emphasised
its commitment to the Bank’s price
stability
mandate
and
remained
optimistic that, despite the June 2024
uptick in headline inflation, prices are
expected to moderate in the near term.
This is hinged on monetary policy gaining
further traction, in addition to recent
measures by the fiscal authority to
address food inflation.

In its consideration, the Committee
noted the persistence of food inflation,
which continues to undermine price
stability. It was observed that while
monetary policy has been moderating
aggregate demand, rising food and
energy costs continue to exert upward
pressure on price development. The
prevailing insecurity in food producing
areas and high cost of transportation of
farm produce are also contributing to
this trend. Members were, therefore, not
oblivious to the urgent benefit of
addressing these challenges, as it would
offer a sustainable solution to the
persistent pressure on food prices.

Also noted in its consideration is the
increasing activities of intermediaries
who often finance smallholder farmers,
aggregate, hoard and move farm
produce
across
the
border
to
neighbouring countries. The Committee
suggested the need to put in check such
activities in order to address the food
supply deficit in the Nigerian market to
moderate
food
prices.
The
MPC,
therefore,
resolved
to
sustain
collaboration with the fiscal authority to
ensure
that
inflationary
pressure
is
subdued.

In addition, the Committee expressed
optimism with the recent stop gap
measures by the Federal Government to
bridge the food supply deficit. In
particular, the 150-day duty-free import
window for food commodities (maize,
husked
brown
rice,
wheat
and
cowpeas),
amongst
others,
will


CBN Monetary Policy Review

moderate domestic food prices. It is
noteworthy that these measures will not
lead to direct injection of liquidity into
the economy which would cause further
inflation.
While
the
measure
is
a
welcome development and may prove
effective in the short run, it is expedient
that it is implemented with a defined exit
strategy to avert a possible rollback of
the recent gains in domestic food
production. To support these initiatives,
the
Bank
is
already
engaging
Development Finance institutions like the
Bank
of
Industry
(BOI)
to
ensure
adequate support to industries with a
focus on Small and Medium Scale
Enterprises (SMEs).

The MPC noted the narrowing spread
between the various foreign exchange
segments of the market, an indication of
price discovery and improved market
efficiency, thus reducing opportunities
for arbitrage and speculation. The
Committee noted that the increase in
the level of external reserves would
further build confidence for a more
stable exchange rate and thus urged
the Bank to explore available avenues
to improve inflows, especially through
diaspora
remittances.
In
addition,
Members noted the efforts of the
Federal Government and the private
sector
towards
improving
domestic
refining capacity as this is expected to
reduce
foreign
exchange
currently
being expended on the importation of
refined petroleum products.

The MPC noted the sustained resilience
of the banking system, reflected in
improvements
of
key
financial
soundness indicators (FSIs). Members
further encouraged the continued need
for close monitoring of the system as the
implementation of the recapitalization
exercise progresses.

To consolidate on the gains thus far
achieved,
the
Committee
reemphasised its commitment to stay on
course with its tightening cycle in view of
the urgent need to address inflationary
pressures.

Key Developments in the Domestic and
Global Economies
According to the National Bureau of
Statistics, domestic headline inflation
rose marginally to 34.19 per cent in June
2024 from 33.95 per cent in May 2024,
driven by the continued rise in the yearon-year components of food and core
inflation.
Similarly,
month-on-month
headline inflation rose to 2.31 per cent in
June 2024, from 2.14 per cent in the
preceding month. The food and core
components rose to 2.55 and 2.06 per
cent in June 2024 from 2.28 and 2.01 per
cent in May, respectively.

Real GDP (year-on-year) grew by 2.98
per cent in the first quarter of 2024,
compared with 3.46 per cent in the
fourth quarter of 2023, driven by both the
oil and non-oil sectors. Staff forecasts,
however, suggest that the domestic
economy will grow by 3.38 per cent in
2024, while the IMF has projected growth
at 3.1 per cent in 2024.

As of July 18, 2024, external reserves
stood at US$37.05 billion, compared with
US$34.70 billion as at end-June 2024. This
represents eleven (11) months of import
cover for goods and services.

The global economy, according to the
IMF, is forecast to grow at 3.2 and 3.3 per


CBN Monetary Policy Review

cent in 2024 and 2025, respectively.
Headwinds to the worldwide projection
remain
the
tight
global
financial
conditions and ongoing geopolitical
tensions associated with the wars in
Gaza and Ukraine, both of which have a
significant impact on commodity prices
and the global supply chain.

Global inflation is forecast to continue to
decelerate marginally in 2024 but may
stay above the long-run objectives of
most
advanced
economy
central
banks. Global financial conditions may
remain broadly tight through 2024 and
into 2025.

The
Committee
reaffirmed
its
commitment to continue to monitor
developments
in
the
global
and
domestic economies to guide policy
and ensure that inflation expectations
are adequately anchored.

The next meeting of the Committee will
be held on the 23rd and 24th of
September 2024.

Thank you.

Olayemi Cardoso
Governor,
Central Bank of Nigeria 23rd July 2024


CBN Monetary Policy Review

MONETARY
POLICY
COMMUNIQUE
NO.154 Date: Tuesday, 24 September
2024 MONETARY POLICY RATE RAISED BY
50 BASIS POINTS TO 27.25 PER CENT FROM
26.75 PER CENT

1.0
Background
The Monetary Policy Committee (MPC)
of the Central Bank of Nigeria (CBN) held
its 297th meeting on the 23rd and 24th of
September

to
review
recent
economic and financial developments
as well as assess risks to the outlook.
Eleven of the twelve members of the
Committee were in attendance.

Decisions of the MPC
The Committee was unanimous in its
decision to further tighten policy and
thus decided as follows:
1.
Raise the MPR by 50 basis points
to 27.25 per cent from 26.75 per cent.
2.
Retain the asymmetric corridor
around the MPR at +500/-100 basis
points.
3.
Raise the Cash Reserve Ratio of
Deposit Money Banks by 500 basis points
to 50.00 per cent from 45.00 per cent
and Merchant Banks by 200 basis points
to 16 per cent from 14 per cent.
4.
Retain the Liquidity Ratio at 30.00
per cent

Considerations
The Committee noted the moderation
in headline inflation year-on-year in July
and August 2024. In addition, the MPC
said
the
relative
stability
and
convergence in the exchange rate
across the various market segments,
resultedfrom the Bank’s tight monetary
policy stance. This is expected to
improve confidence, which will enable
economic agents to plan in the medium
to long term.

The
Committee
was,
however,
unanimous in recognising that a lot more
is required to actualise the Bank’s price
stability mandate. The MPC noted that
even though headline inflation trended
downwards due to a moderation in food
inflation, core inflation has remained
elevated, driven primarily by rising
energy prices. The uptrend poses severe
concerns to Members, as it clearly
indicates the persistence of inflationary
pressures. Members thus reiterated the
need to work in close collaboration with
the fiscal authority to address the current
upward pressure on energy prices. The
MPC noted the continued growth in
money supply, recognising the need to
curtail excess liquidity in the system as
well
as
address
foreign
exchange
demand pressures. Members were also
concerned about the growing level of
fiscal deficit, but acknowledged the
commitment of the budgetary authority
not to resort to monetary financing
through Ways & Means. Furthermore,
members observed a strong correlation
between FAAC releases and liquidity
levels in the banking system, as well as its
impact on the exchange rate. The
Committee,
therefore,
agreed
to
increase monitoring of future releases
with a view to addressing its effects on
price developments.

On food inflation, the upside risks
remained flooding, hike in energy prices,
scarcity of PMS and most importantly,
insecurity in farming communities.

Considering the weight of food in the CPI
basket, Members recognised the efforts


CBN Monetary Policy Review

of
the
Federal
Government
in
addressing
insecurity
in
farming
communities and stressed the need to
remain steadfast. In addition, the MPC
applauded the ongoing effort of the
Federal Government to bridge the food
supply deficit through the duty-free
import window for food commodities.
The Committee also expressed optimism
that the lifting of refined petroleum
products from Dangote refinery will
moderate
transportation
costs
and
significantly support the easing of food
price pressures in the short to medium
term. This is also expected to moderate
foreign
exchange
demand
for
importation
of
refined
petroleum
products, with a positive spillover on
external reserve and improvement in the
overall balance of payment position.
Members assessed the performance of
key financial soundness indicators and
noted with satisfaction that, despite
familiar headwinds, the banking industry
remains safe, sound, and stable. The
Committee, however, emphasized the
need to sustain supervisory oversight on
the industry to strengthen its continued
support to the economy.

Following
these
considerations,
Members deliberated on the optimal
policy option to sustain the downward
trend in price development, contain
emerging risks to inflation, stabilize the
exchange rate and safeguard the
banking system while also shielding the
recovery of output growth. In addition,
Members noted that the real policy rate
remains negative even after the recent
moderation in headline inflation. To
attract investments into the economy,
efforts must be sustained to achieve a
positive real interest rate. This would
enhance
the
economy’s
competitiveness
for
international
capital,
thereby
improving
the
exchange rate. Following a review of the
upside risks to price development and
the downside risks to the recovery of
output growth, the Committee opted to
tighten policy further, to safeguard the
gains already accrued in moderating
inflationary pressure.

Key Developments in the Domestic and
Global Economies
According to the National Bureau of
Statistics, headline inflation moderated
to 32.15 per cent in August 2024 from
33.40 per cent in July, driven by a
decline in food inflation, while the core
component inched up. Food inflation
eased to 37.52 per cent in August 2024,
compared with 39.53 per cent in July,
while core inflation rose marginally to
27.58
per
cent
in
August
2024,
compared with 27.47 per cent in July.
Month-on-month, headline inflation fell
to 2.22 per cent in August 2024 from 2.28
per cent in the preceding month, while
food inflation eased to 2.37 per cent in
August 2024, compared with 2.47 per
cent in July. Core inflation, however, rose
marginally to 2.27 per cent in August
2024, compared with 2.16 per cent in
July.

Real GDP (year-on-year) grew by 3.19
per cent in the second quarter of 2024,
compared with 2.98 per cent in the first
quarter, driven by both the oil and non-
oil sectors. Staff forecast indicates that
the economy would grow by 3.32 per
cent in 2024.

The external reserve stood at US$39.07
billion as of 19th September 2024, an
increase of 17.4 per cent compared with


CBN Monetary Policy Review

US$33.28 billion in the corresponding
period of 2023. This represents 8 months
of import cover for goods and services
and 13 months of imports of goods only.
Global growth projection by the IMF
remains at 3.2 per cent in 2024 and 3.3
per cent in 2025. Some of the downside
risks to this projection remain geoeconomic
fragmentation,
elevated
global debt and ongoing geopolitical
tensions between Russia and Ukraine, as
well
as
Israel
and
neighbouring
countries.
As
key
central
banks
commence monetary easing, global
financial conditions are expected to
ease gradually and hopefully offset the
downside risks to the recovery of global
growth. Global inflation is expected to
continue its deceleration in 2024, but
may remain above the long-run targets
of most central banks in the advanced
economies. Members thus expressed
their
commitment
to
continuous
monitoring of developments in the
global and domestic economies to
ensure that the appropriate response is
always deployed to address emerging
risks.

The next meeting of the Committee will
be held on the 25th and 26th of
November 2024.
Thank you.

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


CBN Monetary Policy Review

MONETARY
POLICY
COMMUNIQUE
NO.155 Date: Tuesday, 26 November
2024 Ref: CBN/MPC/COM/155/298
MONETARY POLICY RATE RAISED BY 25
BASIS POINTS TO 27.50 PER CENT FROM
27.25 PER CENT

1.0
Background
The Monetary Policy Committee (MPC)
of the Central Bank of Nigeria (CBN) held
its 298th meeting on the 25th and 26th of
November

to
review
recent
economic and financial developments
as well as assess the risks to the outlook.
All twelve members of the Committee
were in attendance.

Decisions of the MPC
The Committee was unanimous in its
decision to further tighten policy and
thus decided as follows:
1.
Raise the MPR by 25 basis points
to 27.50 per cent from 27.25 per cent.
2.
Retain the asymmetric corridor
around the MPR at +500/-100 basis
points.
3.
Retain the Cash Reserve Ratio of
Deposit Money Banks at 50.00 per cent
and Merchant Banks at 16 per cent.
4.
Retain the Liquidity Ratio at 30.00
per cent

Considerations
This meeting was held on the backdrop
of renewed inflationary pressures, as the
headline, food and core measures rose
year-on-year in October 2024. The
Committee was particularly concerned
that all three measures also inched up
on a month-on-month basis, suggesting
the persistence of price pressures, with
attendant adverse impacts on the
income
and
welfare
of
citizens.
Members,
therefore,
agreed
unanimously to remain focused on
addressing price developments.

While
food
prices
remain
a
key
contributor to the uptick, Members
commended the efforts of the Federal
Government for the improved security,
especially in the North-East of the
country, which would likely enhance
food production. The Committee also
noted the role of rising energy prices on
the general price level due to their
impact on factors of production. The
recent increase in the price of Premium
Motor Spirit (PMS) has also impacted the
cost of production and distribution of
food items and manufactured goods.
The Committee was optimistic that the
full deregulation of the downstream subsector of the petroleum industry would
eliminate scarcity and stabilise price
levels in the short to medium term.
Members thus reiterated the need to
strongly
forge
ahead
with
the
deepening collaboration between the
monetary and fiscal authorities to ensure
the achievement of our synchronised
objectives
of
price
stability
and
sustainable growth.

The Committee noted the improvement
in the external sector, reflected by the
increase in the current account surplus,
enhanced
remittance
and
capital
inflows, which have impacted the
external reserves positively. This suggests
that key policy measures by both the
monetary and fiscal authorities are
yielding
the
desired
outcomes.
Members, however, expressed concern
over persisting exchange rate pressure,
reflecting continued high demand in the
market. Consequently, the Committee


CBN Monetary Policy Review

urged the Bank to explore measures to
boost market liquidity.

Members noted with satisfaction the
continued resilience and stability of the
banking
system
despite
significant
exogenous
and
endogenous
headwinds. Key financial soundness
indicators
such
as
the
Capital
Adequacy Ratio (CAR), Non-Performing
Loan ratio (NPL), Liquidity Ratio (LR),
amongst others, remain strong. The MPC,
however, called on the Bank to maintain
its close surveillance on the banking
system to sustain compliance with
regulatory thresholds and the continued
health of the industry.

The MPC acknowledged the efforts of
the
Bank
in
deepening
financial
inclusion,
towards
improving
the
transmission mechanism of monetary
policy to enhance policy effectiveness.
From the foregoing, Members thus
focused on the optimal policy choice to
address
the
uptrend
in
price
development, stabilis e the exchange
rate and anchor inflation expectations
appropriately.

Key Developments in the Domestic and
Global Economies
Data from the National Bureau of
Statistics showed that headline inflation
(year-on-year) rose to 33.88 per cent in
October 2024, from 32.70 per cent in
September 2024. On a month-on-month
basis, it also rose to 2.64 per cent in
October 2024, from 2.52 per cent in the
previous month, with both the food and
core components contributing to the
continued rise in headline inflation. Food
inflation rose further to 39.16 per cent in
October 2024, from 37.77 per cent in
September, while core inflation also rose
to 28.37 per cent in October 2024, from
27.43 per cent in September.

The
MPC,
however,
noted
the
moderation in the prices of farm
produce and commended the efforts of
the Federal Government in driving
increased productivity in the agricultural
sector.

The recovery of output growth was
sustained, with Real GDP (year-on-year)
growing by 3.46 per cent in the third
quarter of 2024 compared with 3.19 and
2.54 per cent in the preceding and
corresponding periods, respectively. The
growth was driven by both the oil and
non-oil
sectors,
with
a
notable
contribution from the Services sector.
The non-oil sector grew by 3.37 per cent
in the third quarter compared with 2.80
per cent in the second quarter, while the
oil sector grew by 5.17 per cent (year-onyear), compared with 10.15 per cent in
the preceding quarter.

The external reserves rose marginally to
US$40.88 billion as at 21st November
2024 from US$40.06 billion at endOctober 2024, available to finance 17
months of imports.

At the global level, the IMF projects
growth at 3.2 per cent for 2024 and 2025
from 3.3 per cent in 2023. Risks to this
outlook,
however,
include
ongoing
geopolitical
tensions
such
as
the
lingering war between Russia and
Ukraine as well as the crisis in the Middle
East. The deceleration in global inflation
is expected to continue into 2025 and
move towards the long-run objectives of
key central banks in the advanced
economies, albeit at a slow pace. This,


CBN Monetary Policy Review

however, faces a growing risk of reversal
as
talks
of
trade
tariffs
heighten,
following the outcome of the November
2024 United States elections.

In view of the above developments and
identified risks, Members reiterated their
commitment to price stability as the
bedrock of a thriving Nigerian economy.
The next meeting of the Committee is
scheduled to be held on the 27th and
28th of January 2025.

Thank you.

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