In a significant monetary policy decision, the Central Bank of Nigeria, CBN, has maintained its Monetary Policy Rate, MPR, at 27.5%, halting a series of aggressive interest rate hikes that began in early 2024.
The decision was announced by CBN Governor, Dr. Olayemi Cardoso, on Tuesday, following the 300th meeting of the apex bank’s Monetary Policy Committee, MPC, in Abuja.
All 12 members of the committee unanimously agreed to hold all key policy parameters, indicating a unified stance amid Nigeria’s persistent inflation challenges and fragile economic recovery.
In addition to retaining the MPR at 27.5%, the MPC also held the Cash Reserve Ratio at 50% for Deposit Money Banks and 16% for Merchant Banks.
The Liquidity Ratio was left at 30%, while the Asymmetric Corridor was kept at +500/-100 basis points around the MPR.
Cardoso explained that the committee’s decision to hold the rates was aimed at allowing previous policy adjustments to take full effect, and to monitor their impact on headline inflation, exchange rate volatility, and GDP growth.
“The committee believes that holding the MPR provides a window for assessing the effects of previous monetary tightening and the evolving domestic and global economic environment,” Cardoso said.
Since assuming office in 2023, Governor Cardoso has championed a tightening approach to monetary policy in an effort to tame surging inflation, which had been driven by food price volatility, currency depreciation, and rising energy costs.
From February 2024 to March 2025, the CBN had raised the MPR in several consecutive steps from 18.5% to 27.5%—one of the most aggressive monetary tightening cycles in Nigerian history.
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Nigeria’s inflation rate as of April 2025 stood at 33.2%, according to the National Bureau of Statistics, slightly easing from March’s figure but still significantly above the CBN’s target range.
While the apex bank has succeeded in curbing excessive naira depreciation and foreign exchange speculation in recent months, economic analysts have warned that excessively high interest rates could stifle borrowing and investment, dampening economic growth in a country still recovering from COVID-era shocks and ongoing fiscal constraints.
The CBN’s decision to hold the rate is seen as a cautious step toward maintaining macroeconomic stability while supporting real sector growth.
“This pause allows the economy some breathing space and sends a signal to investors that the CBN is willing to balance its fight against inflation with the need to support output and job creation,” said Dr. Uche Nwosu, a senior economist at Lagos Business School.
Following the announcement, financial markets responded calmly, with interbank lending rates remaining stable. Experts believe the CBN will remain data-dependent and may resume rate hikes if inflation rebounds or if fiscal pressures from subsidy payments and debt servicing intensify.
The next MPC meeting is scheduled for July 2025, at which point the committee will reassess macroeconomic indicators and global financial conditions to determine the next course of action.
NAN
