Central Bank of Nigeria Monetary Policy Committee has left its benchmark interest rate unchanged after six hikes last year, saying that it was reassured by stability in the foreign exchange market and saw inflation gradually falling. The bank’s Monetary Policy Rate remained at 27.50 per cent, after 875 basis points of rate hikes in 2024 as the bank stepped up its fight against inflation. Central bank Governor Olayemi Cardoso told a press conference that the Monetary Policy Committee was satisfied by recent macro-economic developments and they were expected to help price dynamics. “Inflation is trending down, and it’s looking positive,” Cardoso said in Abuja, adding that the aim was to bring inflation down to single digits.
All the members of the Committee unanimously voted to hold the benchmark policy rate at 27.50%. The Committee affirmed that the rebased CPI number 24.48% is reflective of current economic realities and evolving consumption patterns.
Monetary Policy Committee (MPC) Decision all 12 members were in attendance: The MPC held Monetary Policy Rate steady at 27.50%, The asymmetric corridor around the MPR was retained +500bps /-100bps; Cash Reserve Ratio for Deposit Money Banks retained at 50.00%; CRR for Merchant Banks retained at 16.00% and Liquidity ratio retained at 30.00%. The Committee recognized the risk of persisting inflationary pressures driven primarily by food prices and emphasized the continued efforts of the fiscal authorities in addressing insecurity in food producing states so that supplies increase and food prices reduce.
The Committee reiterated the need for increased collaboration between the monetary and fiscal authorities, and therefore urged that this collaboration be strengthened to achieve the mutually beneficial objectives of price stability and sustainable growth.
The MPC highlighted the benefits of the improvement in the external sector to exchange rate stability, and the convergence of rates (the spread is currently at 3.33%) between the Nigeria Foreign Exchange Market (NFEM) and the parallel market.
The MPC therefore urged the Central Bank to continue its efforts to boost FX liquidity. The MPC applauded recent measures adopted by the CBN such as the Electronic Foreign Exchange Matching System (EFEMS) and the Nigerian Foreign Exchange Code to foster transparency and credibility in the market. Since the last MPC meeting held on the 26th November 2024, the Naira has appreciated by 9.03% against the US dollars in the NAFEM window. The MPC expressed optimism that the ongoing monetary and fiscal policy reforms would continue to attract Foreign Portfolio Investments (FPI) and Foreign Direct Investments (FDI) flows, as well as diaspora remittances. These reforms appear to be increasing investor and stakeholder confidence in the economy.
The MPC acknowledged the improvement in crude oil production which stood at 1.54mbpd as at January 2025, noting its potential to strengthen the current account balance and enhance external reserves. On banking sector stability: The Committee noted that the banking system remained robust and resilient despite macroeconomic headwinds and urged the CBN to maintain proactive surveillance of the banking system against domestic and external shocks. On recapitalization: The Committee further encouraged the continued close monitoring of the banking system as the implementation of the recapitalization is ongoing to ensure the injection of quality capital as envisaged in the framework is achieved. The next MPC meeting is scheduled to hold on 19th and 20th of May 2025.
CBN retains benchmark interest rate as inflation seen falling gradually
