Nigeria's central bank is formalizing its shift to an inflation-targeting framework that will aim to slow price growth to 13% by 2027.
Under the phased-in plan, the central bank will target 16.5% inflation in 2026, with a tolerance band of plus or minus two percentage points, compared to 18.5% this year, the Central Bank of Nigeria said in its 2026 macroeconomic outlook released on Tuesday. The bank expects price growth this year to average around 21%.
The shift toward inflation targeting mirrors that of peers such as Ghana and South Africa, which used similar changes to stabilize prices and achieve single-digit inflation. The move is the latest in a series of actions taken by President Bola Tinubu since he takes office in 2023. His administration has lifted currency controls, eliminated fuel subsidies and plans to implement a new tax regime from January 1.
“The initial phase includes transitional inflation targets designed to enhance policy credibility,” the central bank said in the report, adding that the framework will serve as a transparent medium-term anchor while institutional capacity is strengthened.
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The bank estimates the naira will rise to an average of 1,451 to 1,400 per dollar in 2026, supported by more efficient foreign exchange markets, stronger capital inflows and current account surpluses.
Foreign exchange reserves are forecast to rise by about 13% next year to $51 billion, while crude oil production – minus condensate – is thought to be about 1.5 million barrels per day.
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According to the document, a larger-than-expected increase in pre-poll spending and extra-budgetary outlays ahead of the elections in 2027 could pose risks to the inflation outlook for 2026.
