## 1. Official and Parallel Exchange Rates, 2007–2025

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### Introduction and context
- June 2023: CBN unified exchange rate windows; transition to a floating exchange rate regime completed in 2024.
- Prior framework (late 2000s–2023) featured multiple coexisting official windows and a parallel market rate; official rates served as policy anchor while the parallel rate captured marginal FX costs.
- Parallel market premium:
  - averaged around 30 percent historically;
  - surged above 70 percent during acute stress episodes (2016–17 and 2020–22).
- Post-unification outcomes:
  - parallel market premium fell to an average of about 9 percent after unification;
  - exchange rate volatility rose to around 11.6 percent (12-month rolling std dev), up from a pre-unification average of 2.7 percent.

### Exchange rate dynamics and policy actions
- Before unification, official exchange rate followed a staircase pattern with discrete devaluations (November 2014, November 2015, June 2016, March 2020), producing extended intervals of near-zero monthly changes and low volatility.
- Parallel market rate adjusted more continuously and reflected marginal FX costs, but was subject to market frictions and liquidity constraints.
- External pressures and reserve losses:
  - Reserves fell from US$40.7 billion in January 2014 to US$26.6 billion in May 2016 (context noted).

### Monetary policy recalibration after unification
- Monetary Policy Rate (MPR) increased sharply post-unification to 27.5 percent.
- Money market rates adjusted upward; interbank call rate shows lower volatility and largely remains within the standing facility corridor but tracked the SDF more closely than MPR since August 2025 due to persistent excess liquidity.
- Treasury bills and lending rates moved significantly higher.
- Savings deposit rates rose only modestly, remaining in the 3–7 percent range despite the sharp increase in MPR and the deposit facility rate.
- Cash Reserve Ratio (CRR) is currently at 45 percent (noted as an important structural feature to be streamlined).

### Interest rate pass‑through: key findings
- Overall assessment:
  - Policy-rate transmission improved since exchange rate unification but remains uneven across instruments; strongest in wholesale markets, weakest for retail deposit rates.
- Contemporaneous (average) pass‑through slopes:
  - interbank call rate: slope ≈ 0.97;
  - 91-day Treasury bill yield: slope ≈ 0.61;
  - average deposit rate: slope ≈ 0.25.
- Regime dependence (per 100 basis point change in the policy rate):
  - “other managed arrangement” (2007–2016): interbank and T-bill rates moved by about 32 and 90 basis points, respectively.
  - “stabilized arrangement” (2016–2023): transmission collapsed; interbank rate moved in the opposite direction due to CBN liquidity injections defending the peg; T-bill and lending rates were unresponsive (γ₀ ≈ 0).
  - Post-unification (post-June 2023): contemporaneous pass‑through surged well above unity for all wholesale rates; deposit rates remained muted across all regimes.
- Asymmetry (“rockets‑and‑feathers” pattern):
  - A 100 basis-point MPR hike raises T-bill and lending rates by roughly 175–180 basis points on impact.
  - A comparable 100 basis-point cut lowers them by only about 25–30 basis points.
  - Interbank rate responds more symmetrically (around 0.6 in both directions).
  - Deposit rates show little response either way (around 0.12) and are not statistically significant in some specifications.

### Conditional exchange rate pass‑through: rationale and implications
- Under a floating regime, exchange rate movements become an active channel of inflation dynamics; the inflationary impact depends on the nature of the underlying exchange rate shock.
- Unconditional pass‑through estimates can be biased when exchange rate movements are driven by heterogeneous structural shocks and by covariance between exchange rates and marginal costs.
- A conditional approach is essential to distinguish pass‑through by shock type and to inform policy responses.

### Methodology (baseline)
- Framework and identification:
  - Analysis adopts the conditional framework of Forbes et al. (2018) and incorporates pre‑identified oil market shocks from Baumeister and Hamilton (2019) into a Bayesian VAR (BVAR).
- Baseline BVAR variables in Cholesky ordering:
  1. oil supply shock,
  2. global growth oil‑demand shock,
  3. the federal funds rate,
  4. Nigerian CPI inflation,
  5. the official exchange rate (bilateral nominal naira/USD),
  6. the monetary policy rate.
- Rationale for variable choices:
  - Nigeria is oil‑dependent with oil revenues affecting FX supply, government spending, and domestic energy costs.
  - Over 80% of Nigerian imports are dollar‑invoiced; the bilateral naira/USD rate is considered more informative for pass‑through estimation than trade‑weighted indices.

### Policy recommendations highlighted in the chapter
- Strengthen the operational framework so that the MPR more effectively anchors the interbank rate and is transmitted to lending and deposit rates.
- Align liquidity management operations with the policy stance to reinforce transmission.
- Streamline the very high CRR (45 percent) to support improved transmission and reduce structural excess liquidity.
- As inflation declines over the medium term, nominal MPR is expected to fall, lowering the cost of liquidity absorption.
- Strengthening confidence in the domestic currency (via lower and more stable inflation) would help ease dollarization pressures, increase demand for naira, reduce structural excess liquidity, and create conditions for gradual CRR reduction.

---

### Exchange rate pass‑through is defined as the ratio between the cumulative response

### Definition and measurement
- Exchange rate pass‑through (ERPT) is defined as the ratio between the cumulative response of CPI and the cumulative response of the exchange rate to a given structural shock at each horizon.
- The exchange rate variable is measured as naira per US dollar (naira/USD), expressed as a log‑difference multiplied by 100. A positive cumulative impulse response indicates a depreciation of the naira; a negative cumulative response indicates an appreciation.
- All responses are to a one‑standard‑deviation structural shock identified via Cholesky decomposition.

### Model specification and estimation details
- Baseline model: six‑variable NIW‑BVAR estimated over 2007M1–2025M9 with six lags; darker band = 68% credible interval (16th–84th percentile); lighter band = 90% credible interval (5th–95th percentile).
- Baseline Cholesky ordering (six variables): (1) oil supply shock, (2) oil demand shock, (3) the federal funds rate, (4) Nigerian CPI inflation, (5) the official exchange rate, (6) the monetary policy rate.
- Extended specification adds monthly change in net claims on central government (ΔNCCG) between exchange rate and MPR, yielding ordering: (1) oil supply, (2) oil demand, (3) Fed funds, (4) CPI, (5) exchange rate, (6) ΔNCCG, (7) MPR.

### Baseline results — shock dependency
- Exchange rate pass‑through is highly shock‑dependent.
- External financial tightening generates conventional inflationary pass‑through.
- Oil‑related shocks yield markedly different outcomes, reflecting dominance of cost‑push channels and structural rigidities.

### Global oil supply disruption shock (adverse oil supply disruption)
- Exchange rate response:
  - Naira appreciates on impact.
  - Cumulative response reaches approximately −1.4 percentage points after six months before gradually moderating.
- CPI response:
  - CPI rises cumulatively by approximately 0.65 percentage points over 24 months despite the appreciation.
- Conditional ERPT:
  - Implied conditional ERPT of −0.49 at h = 12.
- Interpretation:
  - Higher global oil prices strengthen the currency via export earnings, but direct cost‑push effects on fuel, transport, and intermediate inputs dominate, producing inflation despite appreciation.

### Global growth / oil demand shock (positive global growth‑demand driven oil price shock)
- Exchange rate response:
  - Naira appreciates cumulatively by about 1 percentage point after 24 months.
- CPI response:
  - CPI remains statistically indistinguishable from zero with wide credible bands at all horizons.
- Conditional ERPT:
  - Near‑zero ERPT of +0.02 at h = 12.
- Interpretation:
  - Absence of physical scarcity contains cost pressures; appreciation fails to translate into lower consumer prices given price rigidities.

### External financial shock (contractionary US monetary policy / Fed hike)
- CPI response:
  - Raises Nigerian CPI by about 0.2 percentage points on impact, increasing to roughly 0.6 percentage points after 24 months.
- Exchange rate response:
  - Naira depreciates cumulatively by about 2 percentage points at the 12‑month horizon.
- Conditional ERPT:
  - Conditional pass‑through ratio of approximately 0.3 at the 12‑month horizon.
- Dynamics over time:
  - Pass‑through ratio declines steadily over time as the exchange rate continues to depreciate faster than consumer prices respond.
- Contributing factors:
  - Importers treat US tightening as transitory.
  - Administered prices (regulated fuel and electricity tariffs) shielded a significant share of CPI from exchange rate movements for much of the sample.
  - June 2023 subsidy removal and exchange rate unification represent a structural break that likely strengthened transmission going forward; full‑sample estimate may understate post‑reform pass‑through.

### Fiscal extension (monetization and ΔNCCG fiscal shock)
- Shock identification:
  - One‑standard‑deviation innovation to monthly change in net claims on central government (ΔNCCG) equals 2.2 trillion NGN over the 2007–2025 estimation sample.
  - Distributional context: median monthly change near zero (0.04 trillion NGN); maximum observation reaches 18.9 trillion NGN; mean of 0.12 trillion NGN.
- CPI response:
  - Front‑loaded rise in CPI building gradually to about 0.17 percentage points at 12 months and 0.24 percentage points after 24 months.
  - Cumulative CPI response of 0.24 percentage points at 24 months is interpreted relative to the shock size (2.2 trillion NGN).
- Exchange rate response:
  - Naira depreciates sharply on impact, peaking at approximately 1.5 percentage points within the first three months, before reversing and oscillating around zero with wide credible bands.
- Mechanism:
  - Transmission driven primarily by monetization pressures (confidence channel), with inflationary effect operating through domestic money supply rather than sustained exchange rate depreciation.
- Contribution to CPI variance:
  - Fiscal contribution to CPI variance remains modest at 3.3–3.5%.
- Robustness:
  - Seven‑variable model with alternative Cholesky ordering that places fiscal shocks before the exchange rate yields unchanged conditional ERPT for external shocks (oil supply −0.64, Fed funds 0.24) and same fiscal contribution to CPI variance (3.5% vs 3.3% in baseline).

### Conditional pass‑through across regimes and regime change
- Exchange rate unification strengthened exchange rate pass‑through to inflation.
- Post‑unification:
  - A one‑standard‑deviation exchange rate shock raises CPI by about 0.27 percentage points within 12 months.
  - Post‑unification estimates are more tightly identified at short horizons; shorter post‑reform sample (ending at 12 months) limits long‑run inference.
- Pre‑unification:
  - Response based on official exchange rate is muted and imprecisely estimated; CPI remains close to zero with credible bands overlapping zero across most horizons.
  - Using parallel market rate for pre‑unification yields a larger point estimate: cumulative CPI response reaching about 0.65 percentage points after 24 months, but with substantially wider credible bands at longer horizons.

### Interest rate pass‑through and monetary transmission (annex highlights)
- Lack of cointegration across most market rates signals significant "decoupling" in Nigeria's monetary transmission mechanism over the full sample.
- Deposit rate exhibits the lowest pass‑through coefficient across all rates (β = 0.258); policy rate hikes do not translate effectively into higher deposit rates.
- NIW‑BVAR with sum‑of‑coefficients and dummy initial observation priors employed to obtain stable impulse responses given system size and limited sample (225 observations).
- Baseline endogenous variable ordering rationale:
  - External variables (oil supply, oil demand, Fed funds) ordered first as independently determined.
  - Domestic block orders CPI before exchange rate (prices sticky within month).
  - MPR ordered last (CBN observes inflation and exchange rate before setting policy).
- ΔNCCG captures net flow of lending from banking system to federal government, including CBN Ways and Means Advances; classification and ordering reflect role of Ways and Means as residual financing instrument.

### Conclusions and policy implications
- Nigeria’s transition to a market‑determined exchange rate regime has:
  - Strengthened interest rate pass‑through and altered inflation dynamics associated with exchange rate movements.
  - Increased sensitivity of inflation to exchange rate shocks post‑unification, though transmission to retail deposit rates remains weak and operational frictions persist.
- Exchange rate pass‑through is not a structural constant; it depends critically on:
  - Shock composition (oil supply vs oil demand vs external financial shocks).
  - Regime characteristics (pre‑ vs post‑unification).
  - Policy credibility and administered price settings.
- Policy emphasis:
  - Importance of coherent liquidity management and a consistent monetary policy framework as Nigeria moves toward a more fully functioning inflation targeting regime.

*Source: IMF staff, “1. Official and Parallel Exchange Rates, 2007–2025” (sipea2026045).*

### 1. Official and Parallel Exchange Rates, 2007–2025 _____________________________________ 3

### 1. Official and Parallel Exchange Rates, 2007–2025

### Introduction and context
- June 2023: CBN unified exchange rate windows; transition to a floating exchange rate regime completed in 2024.
- Prior framework (late 2000s–2023) featured multiple coexisting official windows and a parallel market rate; official rates served as policy anchor while the parallel rate captured marginal FX costs.
- Parallel market premium:
  - averaged around 30 percent historically;
  - surged above 70 percent during acute stress episodes (2016–17 and 2020–22).
- Post-unification outcomes:
  - parallel market premium fell to an average of about 9 percent after unification;
  - exchange rate volatility rose to around 11.6 percent (12-month rolling std dev), up from a pre-unification average of 2.7 percent.

### Exchange rate dynamics and policy actions
- Before unification, official exchange rate followed a staircase pattern with discrete devaluations (November 2014, November 2015, June 2016, March 2020), producing extended intervals of near-zero monthly changes and low volatility.
- Parallel market rate adjusted more continuously and reflected marginal FX costs, but was subject to market frictions and liquidity constraints.
- The 2014 oil price shock and subsequent external pressures led to significant reserve losses (from US$40.7 billion in January 2014 to US$26.6 billion in May 2016 — context noted in the source).

### Monetary policy recalibration after unification
- Monetary Policy Rate (MPR) increased sharply post-unification to 27.5 percent.
- Money market rates adjusted upward; interbank call rate shows lower volatility and largely remains within the standing facility corridor but tracked the SDF more closely than MPR since August 2025 due to persistent excess liquidity.
- Treasury bills and lending rates moved significantly higher.
- Savings deposit rates rose only modestly, remaining in the 3–7 percent range despite the sharp increase in MPR and the deposit facility rate.
- Cash Reserve Ratio (CRR) is currently at 45 percent (noted as an important structural feature to be streamlined).

### Interest rate pass-through: key findings
- Overall: policy-rate transmission improved since exchange rate unification but remains uneven across instruments; strongest in wholesale markets, weakest for retail deposit rates.
- Contemporaneous (average) pass-through slopes:
  - interbank call rate: slope ≈ 0.97 (near one-for-one contemporaneous pass-through);
  - 91-day Treasury bill yield: slope ≈ 0.61;
  - average deposit rate: slope ≈ 0.25.
- Regime dependence:
  - Under the “other managed arrangement” (2007–2016): interbank and T-bill rates moved by about 32 and 90 basis points, respectively, per 100 basis point change in the policy rate.
  - During the “stabilized arrangement” (2016–2023): transmission collapsed; interbank rate moved in the opposite direction due to CBN liquidity injections defending the peg; T-bill and lending rates were unresponsive (γ₀ ≈ 0).
  - Post-unification (post-June 2023): contemporaneous pass-through surged well above unity for all wholesale rates; deposit rates remained muted across all regimes.
- Asymmetry (“rockets-and-feathers” pattern):
  - A 100 basis-point MPR hike raises T-bill and lending rates by roughly 175–180 basis points on impact.
  - A comparable 100 basis-point cut lowers them by only about 25–30 basis points.
  - Interbank rate responds more symmetrically (around 0.6 in both directions), while deposit rates show little response either way (around 0.12) and both are not statistically significant in some specifications.

### Conditional exchange rate pass-through: rationale and implications
- Under a floating regime, exchange rate movements become an active channel of inflation dynamics; the inflationary impact depends on the nature of the underlying exchange rate shock.
- Unconditional pass-through estimates can be biased when exchange rate movements are driven by heterogeneous structural shocks and by covariance between exchange rates and marginal costs.
- A conditional approach is therefore essential to distinguish pass-through by shock type and to inform policy responses.

### Methodology (baseline)
- Analysis adopts the conditional framework of Forbes et al. (2018) and incorporates pre-identified oil market shocks from Baumeister and Hamilton (2019) into a Bayesian VAR (BVAR).
- Baseline BVAR variables in Cholesky ordering:
  1. oil supply shock,
  2. global growth oil-demand shock,
  3. the federal funds rate,
  4. Nigerian CPI inflation,
  5. the official exchange rate (bilateral nominal naira/USD),
  6. the monetary policy rate.
- Rationale for variable choices:
  - Nigeria is oil-dependent with oil revenues affecting FX supply, government spending, and domestic energy costs.
  - Over 80% of Nigerian imports are dollar-invoiced; the bilateral naira/USD rate is more informative for pass-through estimation than trade-weighted indices.

### Policy implications highlighted in the chapter
- Strengthen the operational framework so that the MPR more effectively anchors the interbank rate and is transmitted to lending and deposit rates.
- Align liquidity management operations with the policy stance to reinforce transmission.
- Streamline the very high CRR (45 percent) to support improved transmission and reduce structural excess liquidity.
- As inflation declines over the medium term, nominal MPR is expected to fall, lowering the cost of liquidity absorption.
- Strengthening confidence in the domestic currency (via lower and more stable inflation) would help ease dollarization pressures, increase demand for naira, reduce structural excess liquidity, and create conditions for gradual CRR reduction.

*Source: IMF staff, “1. Official and Parallel Exchange Rates, 2007–2025” (sipea2026045).*

### 14.      Exchange rate pass-through is defined as the ratio between the cumulative response

### sipea2026045 - 14.      Exchange rate pass-through is defined as the ratio between the cumulative response

### Definition and measurement
- Exchange rate pass‑through (ERPT) is defined as the ratio between the cumulative response of CPI and the cumulative response of the exchange rate to a given structural shock at each horizon.
- Following Forbes et al. (2018), the ERPT measured as this ratio captures how much of a shock‑induced exchange rate movement translates into changes in consumer prices over time.
- The exchange rate response forms the denominator of the ratio; if the exchange rate reacts strongly and persistently to a shock, the resulting ERPT ratio provides a meaningful gauge of the price effects of currency movements.

### Methodology and model specification
- Baseline model: six‑variable NIW‑BVAR estimated over 2007M1–2025M9 with six lags; darker band = 68% credible interval (16th–84th percentile); lighter band = 90% credible interval (5th–95th percentile).
- Exchange rate variable measured as naira per US dollar (naira/USD), expressed as a log‑difference multiplied by 100. A positive cumulative impulse response indicates a depreciation of the naira; a negative cumulative response indicates an appreciation.
- All responses are to a one‑standard‑deviation structural shock identified via Cholesky decomposition.
- Baseline Cholesky ordering (six variables): (1) oil supply shock, (2) oil demand shock, (3) the federal funds rate, (4) Nigerian CPI inflation, (5) the official exchange rate, (6) the monetary policy rate.
- Extended specification adds monthly change in net claims on central government (ΔNCCG) between exchange rate and MPR, yielding ordering: (1) oil supply, (2) oil demand, (3) Fed funds, (4) CPI, (5) exchange rate, (6) ΔNCCG, (7) MPR.

### Baseline results — shock dependency
- Exchange rate pass‑through is highly shock‑dependent.
- External financial tightening generates conventional inflationary pass‑through.
- Oil‑related shocks yield markedly different outcomes, reflecting dominance of cost‑push channels and structural rigidities.

### Global oil supply disruption shock (adverse oil supply disruption)
- Exchange rate response:
  - Naira appreciates on impact.
  - Cumulative response reaches approximately −1.4 percentage points after six months before gradually moderating.
- CPI response:
  - CPI rises cumulatively by approximately 0.65 percentage points over 24 months despite the appreciation.
- Conditional ERPT:
  - Implied conditional ERPT of −0.49 at h = 12.
- Interpretation:
  - Although the shock strengthens the currency through higher export earnings, direct impact of higher global oil prices on fuel, transport, and intermediate input costs dominates via cost‑push and scarcity channels, producing inflation despite appreciation.

### Global growth / oil demand shock (positive global growth‑demand driven oil price shock)
- Exchange rate response:
  - Naira appreciates cumulatively by about 1 percentage point after 24 months (smaller than in supply shock scenario).
- CPI response:
  - CPI remains statistically indistinguishable from zero with wide credible bands at all horizons.
- Conditional ERPT:
  - Near‑zero ERPT of +0.02 at h = 12.
- Interpretation:
  - Higher oil prices raise export revenues and appreciate the naira, but absence of physical scarcity means cost pressures are price‑mediated and more contained, so appreciation fails to translate into lower consumer prices given price rigidities.

### External financial shock (contractionary US monetary policy / Fed hike)
- CPI response:
  - Raises Nigerian CPI by about 0.2 percentage points on impact, increasing to roughly 0.6 percentage points after 24 months.
- Exchange rate response:
  - Naira depreciates cumulatively by about 2 percentage points at the 12‑month horizon.
- Conditional ERPT:
  - Conditional pass‑through ratio of approximately 0.3 at the 12‑month horizon.
- Dynamics over time:
  - Pass‑through ratio declines steadily over time as the exchange rate continues to depreciate faster than consumer prices respond — Fed‑driven depreciation overshoots domestic price adjustment.
- Contributing factors:
  - Importers treat US tightening as transitory.
  - Administered prices (regulated fuel and electricity tariffs) shielded a significant share of CPI from exchange rate movements for much of the sample.
  - June 2023 subsidy removal and exchange rate unification represent a structural break that likely strengthened transmission going forward; full‑sample estimate may understate post‑reform pass‑through.

### Fiscal extension (monetization and ΔNCCG fiscal shock)
- Shock identification:
  - One‑standard‑deviation innovation to monthly change in net claims on central government (ΔNCCG) equals 2.2 trillion NGN over the 2007–2025 estimation sample.
  - Distributional context: median monthly change near zero (0.04 trillion NGN); maximum observation reaches 18.9 trillion NGN; mean of 0.12 trillion NGN.
- CPI response:
  - Front‑loaded rise in CPI building gradually to about 0.17 percentage points at 12 months and 0.24 percentage points after 24 months.
  - The cumulative CPI response of 0.24 percentage points at 24 months is interpreted relative to the shock size (2.2 trillion NGN one‑standard‑deviation).
- Exchange rate response:
  - Naira depreciates sharply on impact, peaking at approximately 1.5 percentage points within the first three months, before reversing and oscillating around zero with wide credible bands.
- Mechanism:
  - Transmission driven primarily by monetization pressures (confidence channel), with inflationary effect operating through domestic money supply rather than sustained exchange rate depreciation.
- Contribution to CPI variance:
  - Fiscal contribution to CPI variance remains modest at 3.3–3.5%.
- Robustness:
  - Seven‑variable model with alternative Cholesky ordering that places fiscal shocks before the exchange rate yields unchanged conditional ERPT for external shocks (oil supply −0.64, Fed funds 0.24) and same fiscal contribution to CPI variance (3.5% vs 3.3% in baseline).

### Conditional pass‑through across regimes and regime change
- Exchange rate unification strengthened exchange rate pass‑through to inflation.
- Post‑unification:
  - A one‑standard‑deviation exchange rate shock raises CPI by about 0.27 percentage points within 12 months.
  - Post‑unification estimates more tightly identified at short horizons; shorter post‑reform sample (ending at 12 months) limits long‑run inference.
- Pre‑unification:
  - Response based on official exchange rate is muted and imprecisely estimated; CPI remains close to zero with credible bands overlapping zero across most horizons.
  - Using parallel market rate for pre‑unification yields a larger point estimate: cumulative CPI response reaching about 0.65 percentage points after 24 months, but with substantially wider credible bands at longer horizons.

### Interest rate pass‑through and monetary transmission (Annex highlights)
- Lack of cointegration across most market rates signals significant "decoupling" in Nigeria's monetary transmission mechanism over the full sample.
- Deposit rate exhibits the lowest pass‑through coefficient across all rates (β = 0.258); policy rate hikes do not translate effectively into higher deposit rates.
- NIW‑BVAR with sum‑of‑coefficients and dummy initial observation priors employed to obtain stable impulse responses given system size and limited sample (225 observations).
- Baseline endogenous variable ordering rationale:
  - External variables (oil supply, oil demand, Fed funds) ordered first as independently determined.
  - Domestic block orders CPI before exchange rate (prices sticky within month).
  - MPR ordered last (CBN observes inflation and exchange rate before setting policy).
- ΔNCCG captures net flow of lending from banking system to federal government, including CBN Ways and Means Advances; classification and ordering reflect role of Ways and Means as residual financing instrument.

### Conclusions and policy implications
- Nigeria’s transition to a market‑determined exchange rate regime has:
  - Strengthened interest rate pass‑through and altered inflation dynamics associated with exchange rate movements.
  - Increased sensitivity of inflation to exchange rate shocks post‑unification, though transmission to retail deposit rates remains weak and operational frictions persist.
- Exchange rate pass‑through is not a structural constant; it depends critically on:
  - Shock composition (oil supply vs oil demand vs external financial shocks).
  - Regime characteristics (pre‑ vs post‑unification).
  - Policy credibility and administered price settings.
- Policy emphasis:
  - Importance of coherent liquidity management and a consistent monetary policy framework as Nigeria moves toward a more fully functioning inflation targeting regime.

*Source: IMF Staff.*

---


_Source: https://www.imf.org/-/media/files/publications/selected-issues-papers/2026/english/sipea2026045.pdf_