The Central Bank of Nigeria (CBN) has left its benchmark interest rate unchanged at 27 percent, reinforcing its tight monetary stance as it works to curb inflationary pressures and stabilise the foreign exchange market.
The decision was announced at the conclusion of the Monetary Policy Committee (MPC) meeting in Abuja, where members voted overwhelmingly to maintain all key policy parameters.
Key Decisions from the 303rd MPC Meeting
-
Monetary Policy Rate (MPR): 27.00% (unchanged)
-
Cash Reserve Ratio (CRR): 45.00% for Deposit Money Banks; 16.00% for Merchant Banks
-
CRR on Non-TSA Public Sector Deposits: 75%
-
Liquidity Ratio: retained at 30.00%
-
Asymmetric Corridor: adjusted to +50/-450 basis points around the MPR
ALSO: CBN Reaffirms Commitment to Financial Inclusion, Monetary Stability at 2025 Awka Fair
Speaking on why MPC held rates, CBN Governor Olayemi Cardoso said the committee opted to maintain the tight stance after reviewing early signs that previous policy actions were beginning to bear fruit. He pointed to the gradual moderation in headline inflation and improved liquidity in the FX market as evidence that monetary tightening is helping cool the economy.
Cardoso noted that despite lingering inflationary pressures, keeping the MPR at 27 percent is crucial to sustaining the downward trajectory of prices and anchoring market expectations. The stance, he added, received strong support from the majority of MPC members.
Beyond holding rates, the MPC approved an adjustment to the Standing Facilities Corridor to +50/-450 basis points, a move designed to enhance policy transmission and give the CBN greater flexibility in managing liquidity and overnight market operations.
The committee also reaffirmed the current CRR levels for banks, underscoring its focus on controlling system liquidity while maintaining financial-sector stability.
The latest decision follows the MPC’s 302nd meeting, where the CBN reduced the MPR by 50 basis points from 27.5 percent to 27 percent which marked its first rate cut since the tightening cycle began. The corridor was also narrowed to +250/-250 basis points in response to early improvements in inflation dynamics.
Fresh data from the National Bureau of Statistics shows Nigeria’s headline inflation eased to 16.05% in October 2025, down sharply from 18.02% in September.
Month-on-month inflation, however, increased to 0.93%, reflecting continued price pressures.
Food inflation saw a significant correction down to 13.12%, compared with 39.16% in October 2024 due to the shift in the CPI base year.
FX Stability Supports Policy Hold
The naira recorded moderate gains ahead of the MPC meeting, with improved liquidity and stronger supply conditions reflecting the impact of recent reforms. Analysts say the tight monetary stance is helping reduce speculative demand and support exchange rate stability.
What’s Next?
With the next MPC meeting scheduled for February 2026, investors and businesses will be watching inflation trends closely for signals of whether the CBN may finally pivot to a more accommodative stance provided price pressures continue to ease.
Comments 2