The decision, which is the first hold in three years, was announced by the Governor of the CBN, Yemi Cardoso, following the latest Monetary Policy Committee (MPC) meeting in Abuja on Thursday.

The MPC resolved to retain the following key financial parameters:

• Monetary Policy Rate (MPR): 27.5%

• Asymmetric Corridor: +500/-100 basis points around the MPR

• Cash Reserve Ratio (CRR): 50% for Deposit Money Banks, 16% for Merchant Banks

• Liquidity Ratio: 30%

Cardoso explained that the decision to hold rates was influenced by economic conditions, particularly the recently adjusted inflation figures.

The National Bureau of Statistics (NBS) reported that Nigeria’s inflation rate had declined to 24.48% from the previously recorded 34.8% following a rebasing of the Consumer Price Index (CPI).

At the press briefing, Cardoso noted the committee’s cautious approach in assessing the impact of previous policy adjustments. “Members, however, were not oblivious to the risk of persisting inflationary pressures driven largely by food prices,” he stated.

The committee acknowledged the government’s efforts to stabilise the economy, noting improvements in the foreign exchange market and a gradual appreciation of the naira.

Again, security interventions in food-producing regions were referred to as essential for easing food price inflation.

The MPC stressed the need for continued coordination between monetary and fiscal policies to achieve sustainable economic growth and price stability. It also urged the CBN to maintain vigilance over the banking sector amid ongoing global and domestic economic uncertainties.

“The committee highlighted the benefits of the improvements in the external sector to exchange rate stability, including the convergence of rates between the Nigerian foreign exchange market and the bureau de change,” Cardoso noted.

As part of its economic strategy, the CBN reaffirmed its focus on ensuring liquidity in the financial system while implementing measures to strengthen market confidence.

The next MPC meeting is expected to review the effectiveness of current policies and assess potential adjustments based on economic indicators.

The Monetary Policy Rate (MPR) was increased by 50 basis points, moving it from 26.75% to 27.25%. This decision was made following the Monetary Policy Committee’s (MPC) latest meeting in Abuja, chaired by CBN Governor Olayemi Cardoso.

As part of a goal to tighten monetary policy, the CBN also increased the Cash Reserve Ratio (CRR) for commercial banks, pushing it up by 500 basis points to 50%. 

Merchant banks were similarly affected, though with a smaller adjustment, seeing their CRR rise by 200 basis points to 16%. The liquidity ratio, however, remains unchanged at 30%, while the asymmetric corridor around the MPR was held at +500/-100 basis points.

Governor Cardoso emphasised that these were necessary to maintain pressure on inflation, which remains a huge issue for Nigeria’s economy. Despite some indications of moderating inflation, the MPC opted for further tightening to prevent a resurgence of price instability.

The consistent rise in interest rates, now in its fifth consecutive hike within the year is an issue for Nigerians. The CBN’s approach has been met with both support and caution, as stakeholders continue to assess the long-term impact of sustained high interest rates on economic growth and investment.

In his statement, CBN Governor justified the multiple interest rate hikes, stating that without these measures, inflationary pressures would have worsened, further straining the economy. 

He noted the importance of keeping inflation in check, noting that no economic model could successfully alleviate poverty in an environment where inflation remains unchecked.