The Central Bank of Nigeria (CBN) has opted to keep the Monetary Policy Rate (MPR) unchanged at 27.5 per cent, following its 300th Monetary Policy Committee (MPC) meeting held on 19th and 20th May 2025.
The decision reflects cautious optimism amid recent economic improvements and lingering inflationary pressures.
All twelve members of the committee were present, and the decision to maintain the current policy stance was unanimous.
In a statement issued by the CBN Governor, Olayemi Cardoso, on Tuesday, the MPC said it reviewed both domestic and global economic developments before deciding to “hold policy” to allow for better understanding of the near-term outlook.
The Committee also retained other key policy parameters: the asymmetric corridor around the MPR remains at +500/-100 basis points, the Cash Reserve Ratio (CRR) stays at 50.00 per cent for Deposit Money Banks and 16.00 per cent for merchant banks, and the liquidity ratio is unchanged at 30.00 per cent.
The MPC acknowledged improvements in Nigeria’s macroeconomic environment, pointing to a narrowing gap between official and parallel foreign exchange rates, a surplus in the balance of payments, and falling petrol prices. It also celebrated a modest decline in food inflation and applauded government efforts in boosting food supply and tackling insecurity in farming areas.
However, the Committee warned that inflationary pressures persist, driven by high electricity costs, ongoing forex demand, and structural challenges. It noted that recent federal policies aimed at increasing local production and reducing forex dependence are encouraging but will take time to yield full results.
“The MPC noted new policies introduced by the Federal Government to boost local production, reduce foreign currency demand pressure, and thus, lessen the pass-through to domestic prices,” the statement read.
On inflation, the MPC cited fresh data from the National Bureau of Statistics, which shows headline inflation slowed to 23.71 per cent in April 2025, down from 24.23 per cent in March. Food inflation dipped to 21.26 per cent, while core inflation eased to 23.39 per cent.
Real GDP growth rose to 3.84 per cent in Q4 2024, driven by both oil and non-oil sectors, particularly services. Meanwhile, the country’s gross external reserves increased by 2.85 per cent to $38.90 billion as of mid-May, providing a healthy import cover of 7.6 months.
Despite these gains, the MPC expressed concern over a recent dip in global crude oil prices and uncertainties tied to US trade policy, warning that these could disrupt Nigeria’s fiscal revenue targets.
The Committee also reaffirmed the stability of Nigeria’s banking sector and praised progress made in the ongoing recapitalisation efforts. Members urged the apex bank to continue rigorous oversight to maintain the health of the financial system.
The Committee “reaffirmed their commitment to prioritise policies targeted at anchoring inflation expectations and easing exchange rate pressure,” Governor Cardoso noted.
Looking ahead, the MPC pledged to monitor global and domestic trends closely to respond swiftly to any “emerging shocks.”
The next MPC meeting is scheduled for 21st and 22nd July 2025.
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