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.

By implication, the inflation rate increase by 0.20%, from the 34.60 per cent recorded in November 2024.

According to the latest Consumer Price Index report, the marginal rise of 0.20 per cent was attributed to heightened demand for goods and services during the festive season.

On a year-on-year basis, the December inflation rate marked a significant increase of 5.87 percentage points compared to 28.92 per cent in December 2023.

This highlights a continued upward trajectory in consumer prices, driven by economic challenges such as currency depreciation, high energy costs, and persistent supply chain disruptions.

According to the NBS report, the average inflation rate for the 12 months ending December 2024 stood at 33.24 per cent, up from 24.66 per cent recorded during the same period in 2023.

The report read, “In December 2024, the headline inflation rate was 34.80 per cent relative to the November 2024 headline inflation rate of 34.60 per cent.

“Looking at the movement, the December 2024 headline inflation rate showed a marginal increase of 0.20 per cent compared to the November 2024 Headline inflation rate. This was due to December festive period increases in demand for goods and services.

“On a year-on-year basis, the headline inflation rate was 5.87 per cent higher than the rate recorded in December 2023 (28.92 per cent). This shows that the headline inflation rate (year-on-year basis) increased in December 2024 compared to the same month in the preceding year (i.e., December 2023).”

The rise reflects sustained pressures on the cost of living throughout the year, affecting both urban and rural areas.

The report highlighted that food and non-alcoholic beverages accounted for the largest share of the inflationary pressure, contributing 18.02 per cent to the overall figure.

Other key contributors included housing, water, electricity, gas, and other fuels, which added 5.82 per cent, and transport, which contributed 2.26 per cent.

Smaller contributions were noted from sectors such as health and communication, which accounted for 1.05 per cent and 0.24 per cent, respectively.

Urban inflation was higher than rural inflation during the period under review.

The urban inflation rate for December 2024 stood at 37.29 per cent on a year-on-year basis, representing a rise of 6.30 percentage points from 31.00 per cent recorded in December 2023.

On a month-on-month basis, urban inflation dropped slightly to 2.56 per cent from 2.77 per cent in November.

Rural inflation, on the other hand, rose to 32.47 per cent year-on-year, 5.37 percentage points higher than the 27.10 per cent recorded in December 2023.

However, the month-on-month rural inflation rate also experienced a marginal decline, dropping to 2.32 per cent from November’s 2.51 per cent.

The report further revealed that food inflation continued to surge, reaching 39.84 per cent on a year-on-year basis in December 2024, compared to 33.93 per cent in December 2023.

The rise was attributed to increases in the prices of staples such as yams, rice, maize, and dried fish.

Despite this, food inflation on a month-on-month basis eased slightly to 2.66 per cent from 2.98 per cent in November, driven by price reductions in items like local beer, soft drinks, and tubers.

Core inflation, which excludes volatile agricultural produce and energy, stood at 29.28 per cent year-on-year in December, up from 23.06 per cent in December 2023.

The NBS noted that the sharpest price increases were observed in transport fares, meals at local restaurants, and personal grooming services.

The inflation is up from 33.20% in March 2024, marking an increase of 0.49% points according to the Nigeria Bureau of Statistics (NBS).

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Comparing year-on-year data, the inflation rate in April 2024 was 11.47% points higher than in April 2023, which stood at 22.22%.

This indicates that the headline inflation rate has risen significantly over the past year.

On a month-to-month basis, the inflation rate for April 2024 was 2.29%, which is 0.73% lower than the 3.02% recorded in March 2024.

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This suggests that the rate at which prices increased in April 2024 was slower than the rate in March 2024, despite CBN‘s promise to tackle the surge.

This bold action was taken as a proactive measure to combat the rising inflationary pressures in the country.

Governor Godwin Emefiele, addressing the media after the two-day Monetary Policy Committee (MPC) meeting in Abuja, announced the decision.

He stated that the committee agreed to maintain the asymmetric corridor at +100 and -700 basis points around the Monetary Policy Rate (MPR).

Additionally, the committee unanimously agreed to retain the Cash Reserve Ratio (CRR) at 32.5 percent and the Liquidity Ratio at 30 percent.

Mr. Emefiele revealed that ten members voted in favor of raising the MPR by 15 basis points, while one member suggested an increase of 25 basis points. However, all members agreed to maintain consistency across all parameters.

The CRR represents the portion of a bank’s total customer deposits that must be held in liquid cash form with the central bank, while the liquidity ratio signifies the proportion of deposits and other assets that banks must maintain to fulfill short-term obligations.

It’s worth noting that this move follows a previous rate hike in January, where the MPC increased the benchmark lending rate from 16.5 percent to 17.5 percent.

These successive actions demonstrate the bank’s commitment to tackling inflation and alleviating pressure on the nation’s currency, the Naira. However, the expected results still remains questionable as inflation continues to rise.

Inflation rose in June to its highest level in more than five years, occasioned by rising prices of food and the high cost of diesel.

The new rate is the highest the nation has recorded since January 2017.

The NBS said the rate is 0.84 percent points higher compared to the rate recorded in June 2021, which is 17.75 percent.

“This means that the headline inflation rate increased in the month of June 2022 when compared to the same month in the previous year (i.e., June 2021),” the NBS said in its report.

On a month-on-month basis, the headline inflation rate increased to 1.82 percent in June 2022, which is 0.03 percent higher than the rate recorded in May 2022 (1.78 percent).