CBN HOLDS MONETARY POLICY RATE AT 27% AMID DISINFLATION TREND
The Central Bank of Nigeria (CBN) has maintained the Monetary Policy Rate (MPR) at 27 per cent, marking the fourth pause in 2025 as the bank prioritises stability amid a moderating but still elevated inflation environment. The Monetary Policy Committee (MPC) said it opted for caution, allowing earlier tightening measures to take full effect before considering an easing phase, Sami Tunji reports.
The November 2025 MPC decision reflects signs of disinflation, a stronger foreign reserve position, and relative exchange rate stability. Despite improvements, headline inflation remains in double digits at 16.05 per cent as of October. Core and food inflation have also eased, reflecting tight monetary policies and improved food supply.
CBN Governor, Olayemi Cardoso, said at a post-MPC briefing in Abuja that monetary stability is a prerequisite for sustainable growth. “After stability comes investment, and after investment comes growth,” he noted, emphasizing policy consistency and market confidence as key priorities for the Bank.
The Committee adjusted the asymmetric corridor around the MPR to +50/-450 basis points to manage short-term liquidity and curb inflation expectations. Liquidity ratios remained at 30 per cent, while cash reserve ratios for commercial banks, merchant banks, and non-TSA public deposits were kept unchanged. These measures aim to absorb excess liquidity without disrupting financial intermediation.
Despite easing headline inflation, many Nigerians still face high costs for housing and essential goods, particularly in urban areas. Speaking at a seminar for finance correspondents in Lagos, CBN Deputy Governor, Corporate Services, Ms Emem Usoro, highlighted that while macroeconomic stability is improving, more work is required to enhance living standards and strengthen economic fundamentals.
Macroeconomic indicators underpinning the MPC’s decision include gross external reserves rising to $46.7 billion in mid-November 2025—the highest in about seven years—providing over 10 months of import cover. The narrowing gap between official and parallel market exchange rates, now below 2 per cent, has reinforced confidence in the CBN’s managed float FX system.
The Governor credited improved FX stability to stronger oil and non-oil exports, increased remittances, portfolio investments, and a transparent willing-buyer, willing-seller framework. Additional factors include Nigeria’s removal from the FATF grey list and a sovereign credit rating upgrade.
Nonetheless, inflation risks persist. Global commodity prices, geopolitical tensions, domestic food supply shocks, and rising money supply could threaten disinflation gains. Broad money supply (M3) rose to N119.04 trillion in October 2025 from N117.78 trillion in September, largely driven by domestic credit expansion and higher government borrowing.
The MPC also maintained the policy corridor to discourage banks from parking funds at the apex bank, reflecting a cautious approach to balancing potential easing with inflation control.
The CBN continues to phase out unconventional interventions, rolling back N2 trillion in outstanding intervention loans, though N4.69 trillion remains unrecovered. Governor Cardoso described the intervention era as distortionary, having crowded out private sector financing, and stressed the importance of attracting development finance institutions for real economic growth.
Bank recapitalisation efforts are ongoing, with sixteen banks meeting new capital thresholds to support domestic and international economic activity. The Governor emphasized that trust, transparency, and policy predictability are now core guiding principles for the CBN.
Experts welcomed the MPC’s decision to hold rates but noted the high cost of borrowing remains a challenge. CEO of Arthur Stevens Asset Management, Olatunde Amolegbe, said the committee acted cautiously to assess the sustainability of disinflation and FX stability amid rising seasonal consumption and potential price pressures.
The Lagos Chamber of Commerce and Industry, represented by Gabriel Idahosa, highlighted the need for future rate reductions to further support growth. Similarly, the Manufacturers Association of Nigeria called for lower interest rates to ease borrowing costs, boost production, and enhance competitiveness in the real sector.
