Inflation Targeting as a Policy Instrument for Ameliorating the persistent Inflationary Pressures in Nigeria

Abstract

Hyperinflation has been a perennial and persistent economic challenge in Nigeria, undermining purchasing power and causing hardship for the citizenry, destabilizing financial markets and eroding public confidence in monetary policy regimes. Inflation targeting, a monetary policy framework adopted globally, offers a potential remedy by explicitly focusing on maintaining low and stable inflation through central bank interventions. This paper examines the relevance, applicability, and potential outcomes of inflation targeting in Nigeria. Using historical data, theoretical frameworks, and comparative case studies, the study argues that a structured inflation targeting regime could serve as an effective tool to mitigate hyperinflation and foster economic stability. It also highlights the necessary institutional, fiscal, and communication strategies that are critical for successful implementation.