The Central Bank of Nigeria (CBN) has decided to keep its benchmark interest rate, the Monetary Policy Rate (MPR), at 27.5 percent.
This marks the second consecutive time the rate has been held steady in 2025. CBN Governor Olayemi Cardoso announced the decision on Tuesday in Abuja, following the 300th meeting of the Monetary Policy Committee (MPC).
Cardoso explained that the committee’s unanimous decision to maintain the rate was to allow more time to assess recent macroeconomic trends. He stated, “The Committee was unanimous in its decision to hold policy and thus decided as follows: Retain the MPR at 27.50 per cent.”
The CBN also opted to keep other key parameters unchanged: the asymmetric corridor at +500/-100 basis points, the Cash Reserve Ratio (CRR) for Deposit Money Banks at 50 percent, for Merchant Banks at 16 percent, and the Liquidity Ratio at 30 percent.
The MPC attributed its decision to recent improvements in economic indicators. According to the National Bureau of Statistics (NBS), headline inflation eased to 23.71 percent in April from 24.23 percent in March, with month-on-month inflation dropping from 3.9 percent to 1.86 percent.
Food inflation also decreased to 21.26 percent from 21.79 percent, and core inflation slowed to 23.39 percent from 24.43 percent.
Cardoso noted, “The MPC noted the relative improvements in some key macroeconomic indicators which are expected to support the overall moderation in prices in the near to medium term.”
While acknowledging government efforts to improve food supply and address insecurity in farming communities, Cardoso warned that inflationary pressures persist due to high electricity costs, foreign exchange demand, and structural challenges.
The Committee welcomed ongoing fiscal and monetary reforms aimed at boosting domestic production and reducing reliance on foreign exchange, which Cardoso emphasized as crucial for limiting inflationary pass-through.
The MPC also observed an increase in Nigeria’s external reserves, which rose by 2.85 percent to $38.90 billion as of May 16, up from $37.82 billion in March, representing approximately 7.6 months of import cover.
The Committee commended the narrowing gap between official and parallel exchange rates and urged fiscal authorities to boost foreign exchange earnings, particularly from oil, gas, and non-oil exports.
Cardoso highlighted Nigeria’s Gross Domestic Product (GDP) growth of 3.84 percent in Q4 2024, an increase from 3.46 percent in the previous quarter.
This growth was driven by both oil and non-oil sectors, with services being a significant contributor.
However, he cautioned that falling crude oil prices, influenced by increased production from non-OPEC countries and uncertainties in U.S. trade policies, could impact government revenues and the implementation of the national budget.
The MPC expressed satisfaction with the stability of the banking sector and called on the CBN to maintain rigorous oversight, especially in light of the ongoing recapitalization exercise.
Cardoso concluded by stating, “Members reaffirmed their commitment to prioritise policies targeted at anchoring inflation expectations and easing exchange rate pressure.”
The next MPC meeting is scheduled for July 21 and 22, 2025.
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