The Central Bank of Nigeria (CBN) has left the country’s key interest rate unchanged at 27.5% following the conclusion of its 300th Monetary Policy Committee (MPC) meeting in Abuja.
Governor Olayemi Cardoso made the announcement on Tuesday, confirming that the decision was unanimous among committee members.
Alongside the Monetary Policy Rate (MPR), the Cash Reserve Ratio (CRR) for commercial banks remains fixed at 50%, while mortgage banks continue with 16%. The Liquidity Ratio (LR) stays at 30%, and the asymmetric corridor remains unchanged at +500/-100 basis points around the MPR.
This decision is coming against the backdrop of slightly improving inflation figures. Nigeria’s inflation rate eased to 23.7% in April, according to the National Bureau of Statistics. That figure, though still high, provided a narrow window for policymakers to pause further tightening.
Cardoso offered a measured explanation for the committee’s choice: “The committee unanimously agreed to retain MPR at 27.50 percent.” The rationale, he said, was based on ongoing economic adjustments and the need to consolidate recent gains.
This pause is a cautious departure from a series of previous hikes. Since mid-2023, the CBN has steadily increased rates in a bid to fight inflation and manage currency volatility. The current move, while conservative, signals a wait-and-see approach amid fragile macroeconomic conditions.
We’re also watching the naira. As of last week, the official exchange rate hovered around N1,598.72 per dollar, with the parallel market offering slightly worse at N1,635. This narrowing gap is one of the few indicators suggesting some stability, though risks remain.
Inflation is the major concern. Food prices continue to stretch household incomes, and insecurity in food-producing states only complicates matters. “Members, however, were not oblivious to the risk of persisting inflationary pressures driven largely by food prices,” Cardoso said at the briefing.
From where we stand, it’s obvious that the CBN is trying to strike a balance. They’re holding the line, hoping that prior policies begin to bite, but also ready to act again if inflation refuses to budge. The decision to maintain high reserve requirements for banks also sends a strong message, liquidity will be tightly managed.
In plain terms, the CBN is being careful. There’s no rush to ease. No gamble. Just methodical restraint in the hope that inflation softens, the currency strengthens, and confidence returns.
The next MPC meeting is expected to take place in the coming weeks. By then, we’ll have fresh inflation numbers, a better sense of GDP growth, and perhaps a clearer picture of how long this high-interest-rate environment can be sustained.
