The Central Bank of Nigeria (CBN) on Tuesday retained its benchmark interest rate, the Monetary Policy Rate (MPR), at 27.5 per cent for the second consecutive time, along with other key monetary policy parameters. The decision reflects a cautious stance by the apex bank, citing emerging signs of macroeconomic stability and growing investor confidence.
The Monetary Policy Committee (MPC), which concluded its second two-day meeting of the year in Abuja, reached a unanimous decision to maintain the MPR at 27.5 per cent. It also voted to retain the asymmetric corridor around the MPR at +500/-100 basis points, the Cash Reserve Ratio (CRR) of Deposit Money Banks at 50 per cent, CRR for Merchant Banks at 16 per cent, and the Liquidity Ratio at 30 per cent.
Olayemi Cardoso, governor of the CBN, said the decision was based on the MPC’s observation of relative improvements in key macroeconomic indicators. These, he noted, are expected to support further moderation in inflation in the near to medium term. According to him, “The MPC noted the progressive narrowing of the gap between the Nigerian Foreign Exchange Market (NFEM) and Bureau De Change (BDC) windows, a positive balance of payments position, and the easing prices of Premium Motor Spirit (PMS) as encouraging signs of macroeconomic progress.”
Despite these gains, the Committee acknowledged that underlying inflationary pressures remain, driven largely by high electricity tariffs, sustained demand pressure in the foreign exchange market, and other long-standing structural challenges. “The Committee took note of new policies introduced by the Federal Government to boost local production, which should help reduce pressure on foreign currency demand and lessen the pass-through effects on domestic prices,” Cardoso added.
Recent data from the National Bureau of Statistics (NBS) shows that Nigeria’s headline inflation eased to 23.7 per cent in April, down from 24.2 per cent in March, a development the MPC considers a positive signal. Members of the Committee, however, emphasised the need for continued reform implementation to consolidate this progress and boost confidence in the financial system. They urged the CBN to sustain its current policy trajectory and called on the fiscal authorities to intensify efforts to increase foreign exchange earnings, particularly from gas, oil, and non-oil exports.
Ayodeji Ebo, managing director and chief business officer at Optimus by Afrinvest, described the MPC’s decision as expected. “It’s in line with expectations, hence we don’t expect any major change to the economic variables,” he said.
Ebo emphasised the need for the government to improve foreign exchange revenue, particularly from non-oil exports and gas. “The stability of the FX is positive to both foreign and domestic investors. Overall, the fiscal authorities need to come up with more deliberate strategies to support the small and medium scale enterprises,” he added.
Razia Khan, managing director and chief economist for Africa and the Middle East at Standard Chartered Bank, said the CBN’s decision to hold all rates was widely anticipated. “Largely as expected, the CBN kept all interest rates on hold, although expressing the hope that inflation would decelerate in the coming months, helped by government efforts to provide inputs to farmers to boost agricultural productivity,” she said.
Khan attributed recent naira stability to the reforms already undertaken by the CBN, noting that the commitment to orthodox monetary policy was restated. She added, “Adjusting to lower oil prices is seen as a task for the fiscal authorities, although the CBN will extend efforts to attract diaspora flows. In all, little forward guidance was provided, but the CBN notably expressed a quiet confidence that it was doing the right thing. The naira stability is testament to this.”
Tilewa Adebajo, CEO of CFG Advisory, also weighed in on the decision. “Given the stability within the system and the inflationary uncertainties, the move is expected,” he said.
At its previous meeting in February 2025, the MPC similarly maintained the interest rate at 27.5 per cent following the rebasing of the Consumer Price Index (CPI). That decision marked a return to a real rate environment and laid the groundwork for the cautious stance the Committee has continued to adopt.
