Raphael Johnson
The Monetary Policy Committee of the Central Bank of Nigeria has retained the Monetary Policy Rate at 27.50 per cent, marking its second consecutive hold in 2025.
This decision was announced by the CBN Governor, Olayemi Cardoso, during a press briefing on Tuesday in Abuja, following the conclusion of the MPC’s 300th meeting.
This second pause in rates comes after six consecutive hikes recorded in 2024.
Cardoso said, “The Committee was unanimous in its decision to hold policy and thus decided as follows: Retain the MPR at 27.50 per cent,” adding that the pause would enable members to better understand near-term developments in the economy.
With this move, the CBN retained the asymmetric corridor around the MPR at +500/-100 basis points, the Cash Reserve Ratio of Deposit Money Banks at 50.00 per cent, and that of Merchant Banks at 16.00 per cent, while keeping the Liquidity Ratio unchanged at 30.00 per cent.
The MPC based its decision on recent improvements in macroeconomic indicators. According to the National Bureau of Statistics, headline inflation dropped to 23.71 per cent in April 2025 from 24.23 per cent in March.
On a month-on-month basis, inflation also declined significantly from 3.9 per cent to 1.86 per cent. Food inflation fell to 21.26 per cent from 21.79 per cent, while core inflation eased to 23.39 per cent in April from 24.43 per cent in March.
The Committee noted these developments with cautious optimism. “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,” Cardoso said.
He also acknowledged the efforts of the government in improving food supply and tackling insecurity in farming communities.
Despite these gains, the CBN expressed concern about lingering inflationary pressures driven by high electricity costs, persistent demand for foreign exchange, and structural issues within the economy.
The Committee welcomed reforms introduced by the Federal Government aimed at boosting local production and reducing demand for forex, noting that such moves would help dampen inflationary pass-through.
The MPC also reviewed developments in the foreign exchange market and urged the apex bank to continue implementing reforms to enhance investor confidence.
The governor noted that Nigeria’s gross external reserves increased by 2.85 per cent to $38.90bn as of May 16, 2025, compared to $37.82bn at the end of March, representing 7.6 months of import cover.
Cardoso said the Committee was encouraged by the progressive narrowing of the gap between the official and parallel forex market rates and urged the fiscal authorities to intensify efforts to grow FX earnings, particularly from oil, gas and non-oil exports.
The Committee further acknowledged the improvement in Nigeria’s real GDP, which grew by 3.84 per cent in the fourth quarter of 2024, up from 3.46 per cent in the previous quarter, driven by both oil and non-oil sectors, especially services.
However, Cardoso noted concerns about declining crude oil prices, which could threaten fiscal revenues.
“The Committee expressed concerns about the recent decline in crude oil prices, attributable to increased production by non-OPEC members as well as uncertainties associated with U.S. trade policy, which present new challenges for fiscal receipts and budget implementation,” he said.
The MPC commended the relative stability in the banking sector and called on the apex bank to sustain effective oversight amid the ongoing recapitalisation exercise.
“Members reaffirmed their commitment to prioritise policies targeted at anchoring inflation expectations and easing exchange rate pressure,” the governor said.
