CBN’s Tight Monetary Policy May Cut Inflation to 22.1% in 2025 – World Bank

The World Bank has projected that Nigeria’s inflation rate could drop to an average of 22.1% in 2025, thanks to the Central Bank of Nigeria’s (CBN) continued tight monetary policy. This was revealed in the latest Nigeria Development Update report, launched in Abuja. The World Bank credits the CBN’s firm stance on monetary policy for gradually restoring price stability and shaping inflation expectations, despite current high rates.

According to the report titled “Building Momentum for Inclusive Growth,” recent economic indicators have improved, including GDP growth, stronger government revenue, and better fiscal management. However, inflation remains stubbornly high, largely due to factors such as the removal of petrol subsidies, currency unification, higher logistics and energy costs, and ongoing food supply challenges. Still, the Bank believes the current tightening approach by the CBN is beginning to pay off.

The report shows the economy grew by 4.6% year-on-year in Q4 2024, bringing full-year growth to 3.4%—Nigeria’s best performance since 2014, discounting the post-COVID rebound. On the fiscal side, things also looked up, with the deficit narrowing and revenues nearly doubling, from ₦16.8tn in 2023 to ₦31.9tn in 2024. The World Bank sees this improved outlook as a chance for Nigeria to shift public spending toward sectors that need it most, such as healthcare, education, and infrastructure.

Taimur Samad, the acting World Bank Country Director, emphasized that Nigeria now has a historic opportunity to improve how public funds are spent. He called for a break from unsustainable patterns of the past and urged targeted investments in social infrastructure. This, he argued, is essential if the country hopes to achieve long-term, inclusive growth and reduce poverty at scale.

While finance and ICT remain strong economic drivers, the report highlights their limited reach in terms of job creation. World Bank Lead Economist Alex Sienaert noted that Nigeria’s public sector must both deliver essential services and enable the private sector to lead the charge on growth and employment. He stressed that sustainable economic development will require productivity boosts in sectors that employ large numbers of Nigerians, reinforcing the importance of private-sector involvement.

Source: Punch