Federal finance and statistics / Central Bank of Nigeria

Monetary policy and inflation in Nigeria: What Measure of Inflation Should the CBN Target?

This study investigates which measure of inflation responds most strongly to mone tary policy shocks in Nigeria over the period 2000Q1 to 2024Q2. Fitting a Structural Vector Autoregressive [SVAR(1)] model, the results indicate that when M3 is adopted as the intermediate monetary policy target, all three measures of inflation tend to rise following a monetary policy shock. In contrast, inflation declines when M2 is used as the intermediate target. The findings further show that, irrespective | Keywords: Core inflation, food inflation, headline inflation, monetary policy, SVAR