The Central Bank of Nigeria (CBN) has chosen to keep the monetary policy rate (MPR) at 27%, reflecting a cautious approach to sustaining inflation control and foreign exchange market stability. The announcement came from CBN Governor Olayemi Cardoso during Tuesday’s 303rd Monetary Policy Committee (MPC) meeting.
This follows the September decision when the CBN reduced the MPR from 27.5% to 27%, the first cut since the post-COVID era.
Why the Rate Was Retained
Governor Cardoso explained that the MPC believes economic conditions have not yet stabilized sufficiently to allow for another rate reduction.
“The Committee decided by a majority vote to maintain the monetary policy stance,” he stated.
The MPR serves as the benchmark interest rate, guiding lending and borrowing rates across the economy. Retaining it at 27% allows the CBN to maintain a tight monetary policy aimed at curbing inflation and sustaining investor confidence.
Although inflation has been trending downward, the committee opted for caution, noting that a premature rate cut could destabilize the recovery process.
Inflation Trends and Monetary Adjustments
Recent data highlights continued improvements in inflation:
- October 2025: 16.05%
- September 2025: 18.02%
- August 2025: 20.12%
Alongside holding the MPR, the CBN revised the corridor to +50/-450%, up from +250/-250% in September. Key monetary tools remain unchanged:
- Cash Reserve Ratio (CRR): 45% for Deposit Money Banks, 16% for Merchant Banks
- Liquidity Ratio: 30%
These actions underline the CBN’s careful, flexible strategy in managing Nigeria’s economic recovery.
Impact on Businesses and the Economy
Keeping the interest rate at 27% has mixed effects:
- Supporting businesses: Maintains purchasing power and encourages savings.
- Signaling caution: Reflects the ongoing uncertainty in macroeconomic conditions.
The MPC’s decision demonstrates the CBN’s commitment to balancing growth with financial stability, ensuring that monetary policy aligns with sustainable economic recovery.
By holding the MPR steady at 27%, the CBN reinforces its measured, data-driven approach to controlling inflation, stabilizing the forex market, and supporting Nigeria’s broader economic recovery.
