Market News

The Central Bank of Nigeria (CBN) has decided to maintain its benchmark interest rate, the Monetary Policy Rate (MPR), at 27.5 per cent, marking the second consecutive pause in 2025. The decision was announced on Tuesday by CBN Governor Olayemi Cardoso during a press briefing in Abuja, following the conclusion of the Monetary Policy Committee’s 300th meeting.

Cardoso explained that the committee’s unanimous decision to hold the rate was to allow more time for assessing recent macroeconomic trends. “The Committee was unanimous in its decision to hold policy and thus decided as follows: Retain the MPR at 27.50 per cent,” he said.

The CBN also retained other key parameters: the asymmetric corridor at +500/-100 basis points, the Cash Reserve Ratio (CRR) of Deposit Money Banks at 50 per cent, that of Merchant Banks at 16 per cent, and the Liquidity Ratio at 30 per cent.

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 per cent in April from 24.23 per cent in March. Month-on-month inflation dropped from 3.9 per cent to 1.86 per cent. Food inflation also decreased to 21.26 per cent from 21.79 per cent, while core inflation slowed to 23.39 per cent from 24.43 per cent.

“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 acknowledged government efforts to improve food supply and address insecurity in farming communities, while warning that inflationary pressures persist due to high electricity costs, foreign exchange demand, and structural challenges.

The Committee welcomed ongoing fiscal and monetary reforms, particularly those aimed at boosting domestic production and reducing foreign exchange dependence. Cardoso stated that these efforts are key to limiting inflationary pass-through.

The MPC also discussed Nigeria’s external reserves, which rose by 2.85 per cent to \$38.90 billion as of May 16, up from \$37.82 billion in March. The increase represents about 7.6 months of import cover. The Committee praised the narrowing gap between official and parallel exchange rates and urged fiscal authorities to grow foreign exchange earnings, particularly from oil, gas, and non-oil exports.

Cardoso also noted that Nigeria’s GDP grew by 3.84 per cent in Q4 2024, up from 3.46 per cent in the previous quarter, driven by oil and non-oil sectors, especially services.

Despite this, he warned that falling crude oil prices — influenced by rising production from non-OPEC countries and uncertainties around U.S. trade policies — could impact government revenues and implementation of the national budget.

The MPC expressed satisfaction with the banking sector’s stability and called on the CBN to continue oversight, particularly in light of the ongoing recapitalisation exercise.

“Members reaffirmed their commitment to prioritise policies targeted at anchoring inflation expectations and easing exchange rate pressure,” Cardoso said.

The next MPC meeting is scheduled for July 21 and 22, 2025.