Inflation Targeting and Economic Growth Nexus in Nigeria: Implications for Monetary Policy

Abstract

The study examined inflation targeting –economic growth nexus in Nigeria, with the aim of imbibing the useful lessons and avoiding the pitfalls from cross-country experiences. The study employed descriptive approach to the study with data sourced from the Central Bank of Nigeria Statistical Bulletin of various issues. Previous study was also consulted to enrich the work. The most salient observations from the study include first: all the countries that adopted inflation targeting recorded a reduced inflation figure and improved economic growth after adopting inflation targeting than before the adoption. Second, Nigeria is absent from the list of countries that have adopted inflation targeting as a monetary policy framework, while South Africa and Ghana are the only countries in Africa that have adopted inflation targeting. Based on the observations some recommendations were made, mostly the need for the monetary authorities in Nigeria to adopt and implement fully the framework considering the harmful and suicidal effect of inflation on economic growth and investment on the economy.